OPEC+ announced on Sunday that it will increase oil production starting in November by 137,000 barrels per day (bpd), maintaining the same output increase that was announced in October.
This decision comes despite expectations of a global supply surplus for this year and in 2026. The increase in supply was largely anticipated, as Saudi Arabia aims to gain more market share to strengthen its government revenue, given its increasing budget deficit.
It also seeks to fend off competition from U.S. shale producers and other countries such as Brazil, Canada, Guyana, and Argentina.
“In the week leading up to the announcement, the market experienced significant fluctuations as speculation about a potential supply increase circulated in the media,” said MBSB Research.
Although oil prices settled higher on Friday, with Brent crude futures rising by 42 cents (0.7%) to $64.53 a barrel and U.S. West Texas Intermediate crude increasing by 40 cents (0.7%) to $60.88—the overall trend for the week was a decline.
Brent fell by 8.1%, marking its largest weekly loss in over three months, while WTI dropped by 7.4%. The new supply levels are expected to place additional pressure on oil prices, given the growing supply surplus and the inability of demand to fully absorb the excess.
According to the latest Short-Term Energy Outlook (STEO) released in September 2025, the U.S. Energy Information Administration (EIA) anticipates a supply increase of 2.3 mil barrels per day in 2025, more than double the expected demand rise of 0.7 to 0.9 mil barrels per day.
However, there are some positive factors that could support crude oil prices. One is that OPEC+ has been producing oil below its quota levels throughout the year, as not all OPEC producers have the capacity to increase output.
Currently, it is understood that OPEC+ is producing about three-quarters of what it has promised. Additionally, Russia, the largest producer in the cartel after Saudi Arabia, faces potential supply disruptions due to Ukrainian strikes on its oil facilities and pressure from the US and Europe on its oil sector. China’s persistent crude oil stockpiling also helps mitigate the impact of the increased supply.
“We believe the oil market is navigating a complex environment characterized by a surplus of crude oil and a fragile balance between rising supply, moderate demand, and unpredictable external influences,” said MBSB.
Given these challenges and the volatility of supply and demand, we project that Brent crude will average between $65 and $70 per barrel in the fourth quarter of 2025 to early 2026. The price range is higher that the Friday close at $64.53.
“We maintain a neutral outlook for the sector,” said MBSB. —Oct 6, 2025
Main image: Danfoss
