Crude oil prices surge to $65.96 as OPEC+ signals cautious production increase, global supply concerns fade

Oil prices have risen recently as fears of oversupply in the global market have begun to fade following a restrained production increase decision by the OPEC+ alliance. This cautious approach to output growth signals the group’s intent to balance supply and demand carefully, moderating the risk of flooding the market with excess crude. The decision by OPEC+ has rekindled hopes of price stability amid ongoing concerns about demand softness and elevated production levels outside the cartel’s control.

Brent crude futures rose on Wednesday, reaching $65.96 a barrel, while U.S. West Texas Intermediate (WTI) crude climbed to $62.27 a barrel.

Cautious approach to market stability

The OPEC+ group, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allied non-OPEC oil producers such as Russia, approved a modest increase of 137,000 barrels per day (bpd) for November. This rise mirrors the output hike made in October and is significantly lower than some market expectations for a more aggressive increase. The smaller-than-anticipated boost reflects a cautious stance aimed at maintaining market equilibrium without triggering an oversupply glut that could depress prices further.

Market participants initially feared that a larger increase in production could exacerbate supply gluts, weighing heavily on prices. However, the restrained hike has helped ease such concerns, contributing to a rise in oil prices. 

Underlying this market development is the persistent tension between supply and demand dynamics. Globally, oil supply growth remains robust. Non-OPEC producers, led by the United States, continue pumping at near record levels with an expected U.S. production of 13.53 million bpd in 2025, up from previous forecasts. This output strength is driven primarily by gains in the Gulf of Mexico and the Permian Basin, contributing to a substantial increase in global oil inventory levels.

Read more: Crude oil prices climb to $65.63 amid OPEC+ output hike, demand concerns

IEA’s revised demand projections

On the demand side, the outlook remains mixed. The International Energy Agency (IEA) projects global oil demand to increase by about 740,000 bpd in 2025, slightly better than earlier forecasts. Demand growth is largely supported by advanced economies where lower oil prices and stronger economic recovery boost consumption. However, demand in emerging markets, particularly China, remains subdued, with China’s deliveries falling short and overall non-OECD demand growth stagnant. Seasonal factors such as a reduction in heating fuel needs also weigh on demand projections for the final quarter of 2025.

While OPEC+ has opted for a conservative production increase, internal dynamics within the alliance remain complex. Saudi Arabia reportedly advocated for a larger output boost—potentially two to four times the approved increase—to reclaim market share rapidly. Conversely, Russia favored a more measured approach to protect oil prices amid concerns over weakening global consumption. The eventual compromise reflects an uneasy balance aimed at preserving stability while responding to competitive pressures.

Adjustments in production

Several member countries must also adjust their production to compensate for previous overproduction. Interfax analysis estimates that the effective output increase, after accounting for compensatory cuts primarily by Kazakhstan, will be about 74,000 bpd rather than the full 137,000 bpd. Russia and Saudi Arabia will each increase production by roughly 41,000 bpd, the UAE by 22,000 bpd, and other members like Iraq, Kuwait, Oman, and Algeria will add smaller volumes. Kazakhstan, meanwhile, must reduce production, reflecting its prior quota breaches.

Further supporting oil prices are recent operational disruptions. A fire and drone attack temporarily halted operations at Russia’s Kirishi refinery, raising supply disruption concerns in a market already wary of excess inventories. Such incidents underline the fragility of oil supply chains amid geopolitical and security risks, which can sometimes counterbalance oversupply fears.

Despite the recent price gains, many analysts caution that supply pressures will remain through 2026. The U.S. Energy Information Administration (EIA) and other forecasters highlight the risk of rising global crude inventories as production growth outpaces demand recovery. The EIA expects oil inventories to increase significantly through next year, exerting downward pressure on prices beyond the short term.