Insights 
VT 
OPEC+ Increases Oil Production
OPEC+ will increase oil production in October but at a reduced pace. The group has agreed to a raise of 137,000 barrels per day, a decrease from the more substantial increases in recent months. This decision marks the beginning of unwinding a previous 1.65 million bpd cut after reversing a 2.5 million bpd reduction earlier this year. The focus seems to be more on reclaiming market share than on maintaining price stability. Saudi Arabia and the UAE are the only members with the capacity to add more supply.
This announcement is made ahead of an expected decline in seasonal demand. Crude oil prices have already fallen about 15% this year to roughly $65 a barrel, affecting oil company profits and employment despite some buffer from Western sanctions on Russia and Iran.
In the short term, the decision may lower oil prices, which could benefit importers like EUR, JPY, and INR, while posing challenges for petrocurrencies such as CAD, NOK, and RUB if crude prices remain weak. This development did not surprise the markets.
With OPEC+ adding supply into a market already facing a seasonal slowdown, the path of least resistance for oil prices appears to be lower. Traders are looking at buying put options on November Brent crude futures, targeting a move towards $60 a barrel. This strategy allows us to capitalize on further price weakness while defining our maximum risk.
OPEC+ Market Dynamics
This bearish view is reinforced by recent data from the Energy Information Administration, which in its early September 2025 report confirmed a global supply surplus for the fourth quarter, citing sluggish demand. We have seen this market-share-driven strategy before, particularly during the 2014-2016 oil glut, which suggests this downward price pressure could be sustained. The current crude price of around $65 a barrel is already down nearly 15% since the start of 2025, showing persistent weakness.
In the currency markets, this translates into a negative outlook for petrocurrencies. We are positioning for further weakness in the Canadian dollar, which has already fallen 3% against the greenback in the last quarter to trade near 1.39. Conversely, lower energy import costs are a tailwind for the Japanese yen and the euro, making call options on these currencies an attractive hedge.
Beyond oil itself, we see opportunities in equity derivatives that reflect these changing cost structures. Put options on energy sector ETFs appear prudent as oil company profit margins are set to compress further. On the other hand, call options on airline and transportation indexes are gaining interest, as lower fuel expenses provide a direct boost to their earnings.
However, since the OPEC+ decision was widely expected, much of this news may already be priced into the market. This suggests that implied volatility in oil options could decrease if prices stabilize instead of falling sharply. Therefore, we are also considering selling out-of-the-money call spreads to collect premium, betting that any price rallies in the coming weeks will be capped.
