OPEC+ will pause production increases in the first quarter of next year, and future policies are still uncertain, which will boost market sentiment to some extent. However, against the backdrop of major challenges facing the global economy and a weak outlook for energy demand, the global oil market is expected to gradually move from a surplus to a shortage.

On November 2, 2025, OPEC+ oil-producing countries met to review the global oil market situation and formulate future production plans. The meeting decided that OPEC+ oil-producing countries would increase production by 137,000 barrels per day in December, which is in line with market expectations. However, it was also decided to suspend the production increase plan for the first quarter of 2026.

The news that oil producers will suspend production increases has moderately reduced concerns over oversupply in the crude oil market and further weakened the bearish influence on the oil market.

It is well known that after the historic "negative oil price" in 2020, OPEC+ began and maintained a production reduction policy for a long time in order to achieve a new balance between supply and demand in the crude oil market. With the change in the supply and demand situation, in April 2025, OPEC+ began to implement the first part of the recovery plan, which is a voluntary production reduction of 2.2 million barrels per day. Over the course of six consecutive months, OPEC+ increased production from landing, accelerating to further acceleration. In September 2025, OPEC+ completed the implementation plan of a voluntary production reduction of 2.2 million barrels per day one year ahead of schedule, combined with the 300,000 barrels per day increase in production from the UAE due to the adjustment of the production benchmark, the cumulative increase in production plan from the oil-producing countries reached nearly 25 million barrels per day. It can be seen that the pace of production increase in this stage is significantly faster than the market's expectations, thus forming a sustained bearish impact on the oil market.

Although OPEC+ began to exit the second part of the agreement, which is a joint production cut of 1.65 million barrels per day, from October 2025, OPEC+ produced 137,000 barrels per day more in October, November, and December, a moderate increase over three consecutive months, which meets market expectations, is bearish for the oil market, but the impact is relatively weak. Further, in the context of the market generally trading the oversupply of the oil market, OPEC+ oil-producing countries announced that they would suspend the increase in production in the first quarter of next year, which is "unexpected" and is somewhat conducive to the market mentality.

Meanwhile, the impact of the increase in production by oil-producing countries on the oil market is also limited by two factors: First, some oil-producing countries have insufficient production capacity, and their actual production cannot match the target production. Second, some oil-producing countries also have compensation cuts. Since some major oil-producing countries' actual production in the previous production-cutting phase was significantly higher than the target production, in the current production-increasing phase, the increase in production by related oil-producing countries is accompanied by compensation cuts by another part of oil-producing countries. According to the schedule of the future compensation cuts released by OPEC on November 2, the total monthly compensation cuts by oil-producing countries will range from 1.85 million barrels per day to 8.22 million barrels per day from October 2025 to June 2026. This leads to a difference between the planned and actual increase in production by oil-producing countries, thus increasing the volatility of the oil market.

Overall, OPEC+ pausing production increases in the first quarter of next year, with future policies still subject to change, has boosted market sentiment to some extent. However, against the backdrop of significant challenges facing the global economy and a weakening outlook for energy demand, the previous production increases by OPEC+ have increased pressure on the supply side. Coupled with expectations of production increases from the United States and other oil-producing countries, the expectation of a global oil surplus is gradually becoming a reality.

In addition, from a macro perspective, the moderate de-escalation of international trade disputes is conducive to market sentiment, but economic weakness continues to impact the commodity market, and the oil market will still be under pressure. Geopolitically, there is a high degree of uncertainty in the situation in Eastern Europe, the Middle East, and South America, and geopolitical risks and related sanctions that trigger supply concerns continue to be the most significant risk factors perturbing the oil market.

Considering factors such as macroeconomic pressures, overcapacity in industries, and geopolitical uncertainties, the oil market is expected to be difficult to optimize before the end of the year, and crude oil prices face the risk of fluctuating downward. By the end of 2025, European and American oil prices may test the price around 60 and 55 US dollars per barrel, respectively. In 2026, the focus of oil prices is expected to further decline. The risk factors are that one is the resurgence of geopolitical tensions, and the other is systemic risks in the economic and financial systems.

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