The Commodities Feed: OPEC+ Set for Another Supply Increase
OPEC+ is expected to meet this weekend with the likely outcome of approving a production increase in December. The oil market is trending lower this week as traders assess the effects of US sanctions on Russian oil shipments.
Market behavior indicates skepticism about a significant reduction in Russian oil supply. A recent meeting between President Trump and President Xi reinforced this view, as Russian oil exports to China were not discussed during their talks. This matters because China imports about 2 million barrels per day of Russian oil, making it the primary buyer who could offset any decrease in Russian crude imports by India.
OPEC+ Supply Decisions
On Sunday, OPEC+ seems poised to approve a supply increase of 137,000 barrels per day for December. The ongoing uncertainty over sanctions on Russia supports this decision. However, this increase may deepen the bearish sentiment in the market, contributing to a large surplus expected through 2026 — assuming no unexpected disruptions in Russian supply occur.
Market Dynamics Around Distillates
Middle distillate cracks remain strong, underpinned by continued uncertainty about how sanctions will affect Russian diesel exports. The ICE gasoil crack is stable around $30 per barrel, having rallied sharply since mid-October.
"Clearly, the price action suggests that the market is not convinced that we will lose a significant amount of Russian oil supply."
"Russian oil flows to China apparently not part of broader talks between the two leaders."
"Middle distillate cracks remain well supported, with lingering uncertainty over the impact of sanctions on Russian diesel exports."
Author's summary: OPEC+ is expected to raise output in December amid unclear impacts from US sanctions on Russian oil, sustaining bearish pressure on an already saturated oil market through 2026.