OPEC production decreased in November despite increased production quotas. Surveys by Reuters and Bloomberg show that production fell, even though quotas allowed for an increase of 85,000 barrels per day.
Some countries have reached maximum capacity, while others, like Iraq, need to cut production due to previous overproduction. Saudi Arabia did not raise production in November despite a higher quota, reflecting lower demand. Consequently, Saudi Arabia has lowered its official selling prices.
Conflicting Production Assessments
Reuters reports a decrease of about 400,000 barrels per day below the agreed level for quota-bound countries. In contrast, Bloomberg notes a slight overproduction of approximately 260,000 barrels per day. The difference in assessments is notable for Iraq and the UAE, where Bloomberg registers higher production than Reuters.
We are seeing signs that OPEC’s ability to influence the market is weakening, as production fell in November despite higher quotas. The conflicting reports from Reuters and Bloomberg on the exact production figures only add to market uncertainty. This suggests that price volatility may increase in the coming weeks.
The Saudi move to cut official selling prices seems to confirm fears of weakening global demand. Recent data supports this, with China’s latest manufacturing PMI for November 2025 dipping to 49.7 and U.S. third-quarter GDP growth being revised down to a mere 1.4%. These indicators suggest that even if OPEC could cut supply effectively, there might not be enough demand to support higher prices.
While OPEC is struggling, non-OPEC supply remains robust, particularly from the United States. The latest EIA data shows U.S. crude output holding near record highs of 13.4 million barrels per day. This strong external supply further limits the upside for crude prices and counteracts OPEC’s efforts.
Market Strategy for 2026
This dynamic, where supply concerns are overshadowed by demand destruction, is something we saw play out back in 2023 when central bank tightening capped oil price rallies. The current situation suggests a range-bound or bearish market heading into early 2026. Therefore, traders should be cautious about long positions.
Considering these factors, purchasing put options on WTI or Brent futures for the first quarter of 2026 provides a good hedge against a potential drop below key support levels. Selling out-of-the-money call options or establishing bear call spreads could also be a viable strategy. This approach allows us to profit from expected price stagnation or a further decline driven by the weak economic outlook.
