With OPEC edging towards a December output rise, what does a supply increase and a diminished scarcity premium look like for investor heading into 2026? - Rhys Love

The Organisation of Petroleum Exporting Countries (OPEC+) is preparing to raise output in December by roughly 137,000 barrels a day, extending a series of small monthly increases enough to flatten near-dated prices. The group is due to review the plan at a virtual meeting on 2^nd November 2025. Does this represent a regime shift, or is it simply a tidying move in a market already trending looser towards the end of this year?

Brent Crude Oil has spent the autumn trading in a low-to-mid $60s range as surplus headlines and regular inventory draws put downward pressures on prices. Consequently, prices have softened and then steadied week by week this month, as policy has come out of the U.S. This suggests that policy signals land first in the curve before flat price decides on a level, reflecting volatility in global policy decision making engendering OPEC+ to fashion itself as a steadying hand. This is not a supply shock in the classic sense. The increment, 4.3 million barrels over the last month, is modest, as roughly a tenth of a day of OECD liquids cover on recent runrates. The move is therefore best interpreted as spare capacity, rather than an attempt to force prices lower. In a world of subdued demand growth, it is important to be cognisant of the difference.

Four levers explain the set-up. Agency baselines still point to inventory builds into Q4, with global demand growth running below historical norms. The implication is a flatter prompt spread rather than a wholesale rerating of flat price. Furthermore, oil policy usually transmits through the curve. When supply optics loosen a touch, the prompt spready, nearest vs. next-month Brent, tends to narrow first. Unless outages, weather, or geopolitics intervene, that is where the OPEC+ effect is most likely felt. Additionally, this is a distillate winter. When diesel margins stay elevated into winter, refiners typically raise runs, absorbing some of the added crude and limiting further flattening at the front. If margins thaw, barrels show up in stocks instead, reinforcing the looser read. A jump in Very Large Crude Carrier (VLCC) rates on Gulf-to-Asia or West Africa-to-Europe raises the $/bbl cost of moving crude and pinches arbitrage. Softer freight re-opens the lanes and encourages transformations thus boosting confidence as price stabilises. 

The macro backdrop has not re-accelerated. What is not driving this is sudden change in long-run demand, a fracture inside the group, or a collapse in physical availability. Agencies still see subdued demand growth into 2026, as the small-step cadence is precisely the compromise that keeps the alliance, despite Russia managing sanctions frictions, and if the policy were tightening the market, you would expect North Sea differentials and Dubai partials to firm and remain firm. Instead, those physical tells move with the data flow, not against it. 

The Base Case would say that OPEC+ confirms 137,000 barrels a day, Brent ranges between $60-$65 with a prompt spread ~10c to ~25c. If a Bull Case materialises, with supply tightening as a consequence of OPEC+ intervention, a subsequent OECD response amidst wintry chills, and Russian seaborne exports fall on stricter enforcement margins will likely be pushed up above $70, prompt spread flips positive. However, this seems unlikely. Even within the Bear Case, which is not entirely impossible, it would look like a loosening with margins normalising, with Brent sitting at $58-$60. 

To conclude, the OPEC+ is nudging, not lurching. Small and reversible steps keep barrels on call without encouraging the market to break. If there is a genuine break from range, it is far more likely to come from winter weather or transport difficulties or a strengthening or even a weakening of U.S foreign and economic policy pressuring Russia, rather than a telegraphed and organised supply adjustment next week. 

References

Bloomberg News (2025) OPEC+ base case is a small hike for now, delegates say, 27 October 

International Energy Agency (2025) Oil Market Report — October 2025, 14 October 

OPEC (2025) Press release: Monthly meetings of eight OPEC+ countries; next on 2 November 2025

Reuters (2025) OPEC+ leaning towards another small oil output increase, sources say, 27 October 

Reuters (2025) OPEC+ opts for modest oil output hike as glut fears mount, 5 October 

U.S. Energy Information Administration (2025) Short-Term Energy Outlook — October 2025 (text & tables), 2 October

Financial Times (2025) Oil tumbles to five-month low on report of ‘large surplus’, mid-October