Key members of the Organization of the Petroleum Exporting Countries and their allies agreed to keep oil production steady in December, as concerns that the U.S. could resume strikes against Iran after the midterm elections keep geopolitical risks elevated.
Sunday's virtual meeting of seven core members -- Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman -- comes as oil prices remain above $100 a barrel. Continued threats to shipping in the Persian Gulf have pushed freight and insurance costs sharply higher, while global onshore oil inventories are near their lowest levels in at least a decade.
Brent crude for January delivery settled above $113 a barrel on Friday, while West Texas Intermediate, the U.S. oil gauge, closed the session at around $104 a barrel.
Eight months into the conflict, diplomatic efforts to revive peace negotiations between Washington and Tehran show no sign of a breakthrough, raising the prospect that supply chains could remain vulnerable for longer and raise inflationary pressures worldwide.
U.S. Vice President JD Vance sent a message to Mohsen Rezaei, secretary of Iran's Supreme National Security Council, in an effort to restart peace talks, The Wall Street Journal has reported. But the risk of renewed military action remains. The U.S. told several Gulf Arab allies to prepare for a possible short but intensive military campaign against Iran following the midterms, the Journal separately reported.
The conflict has disrupted global oil flows through key shipping routes for months, limiting the broader group called OPEC+'s ability to add barrels to the market and influence the supply balance. Most members continue to produce below their official targets.
Producers are also increasingly relying on alternative export routes to bypass the Strait of Hormuz.
Terminal loadings at the United Arab Emirates' port of Fujairah and Omani terminals, outside the Strait of Hormuz, are running 36% above their prewar levels, while Red Sea shipments are 8% above their baseline, preliminary data from ship-tracking firm Kpler showed. However, verified transits through Hormuz remain at half their prewar level, while Saudi Arabia's east coast loadings are well below the 5 million to 6 million barrels a day range seen in March, averaging 3.49 million barrels a day.
Crude production among OPEC members rose by 920,000 barrels a day to around 25.1 million barrels a day in September, but remained more than 3 million barrels a day below prewar levels in February, according to the cartel's latest data.
OPEC+ had kept production unchanged also for November, following the completion in September of the phased unwinding of 1.65 million barrels a day in voluntary production cuts agreed in 2023. Separate production cuts of around 2 million barrels a day, introduced by OPEC+ in 2022, remain in place through the end of the year.
The group is also reviewing members' production capacity after announcing last year that it would establish a new system for setting production baselines in 2027, which will determine future output quotas.
The seven OPEC+ producers are scheduled to meet again on Nov. 29 to decide production levels for January.