OPEC+ Freezes October Production Policy; Iran Conflict and 2027 Production Baseline Pose Key Variables

[Financial News] OPEC Plus (OPEC+), an alliance of major oil-producing countries including the Organization of the Petroleum Exporting Countries (OPEC) and Russia, has decided to maintain its current oil production policy in October.
Representatives of OPEC+'s seven core members held a video conference on the 6th local time and said in a statement that they had decided to maintain the existing policy. They determined that the member countries must first agree on new production quotas before deciding on further production increases.
The meeting, attended by the seven core members—Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman—was held as military clashes between the United States and Iran entered their seventh month and disrupted oil exports through the Strait of Hormuz.
In August, OPEC+ finalized a plan to increase production in September by gradually unwinding the 1.65 million-barrel-per-day production cut agreed in 2023. However, the volume actually reaching the market remains well below the target because of the effects of the war.
Jorge León, an analyst at Rystad Energy, said, "OPEC+ can adjust its production targets on paper, but there is no guarantee that the corresponding volumes will actually be produced and reach the market." He assessed that "their current influence on the physical oil market is very limited." He added, "The market's attention is now shifting from monthly production adjustments to major discussions over production policy for 2027."
OPEC+ is currently maintaining additional production cuts, applicable to most of its 21 members, through the end of this year. To lift the cuts and release more oil onto the market, the group must reassess each member's production capacity and finalize the '2027 production baseline,' which will serve as the basis for calculating quotas.
The discussions are expected to take place in the second half of this year. According to sources, OPEC+ is highly likely to temporarily suspend the process of increasing production during the final quarter of the year. The statement also made no mention of policy after October.
Meanwhile, the United Arab Emirates (UAE), which had participated in past monthly production decisions, left OPEC in May. The remaining seven core oil-producing countries will hold their next meeting on October 4.
Military clashes between the United States and Iran resumed, diesel prices in the United States hit a record high, and international oil prices surged by more than 7% on a weekly basis.
As of the 4th, Brent crude oil futures settled at $96.28 per barrel, up 76 cents, while West Texas Intermediate crude oil (WTI) futures closed at $91.48 per barrel, up 18 cents. On a weekly basis, Brent crude oil rose about 8%, while WTI gained about 10%.

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