CRUDE OIL AND OPEC DECISION
Oil prices have been pressured in 2025 by challenging geopolitical and economic circumstances, with price movements caused by conflicts, supply disruptions, and concerns over global economic growth. But recent developments suggest that the outlook could be shifting towards a recovery in oil prices. Despite some differences between Saudi Arabia and Russia, OPEC+ recently announced another increase in oil output. But how much impact does OPEC have on the oil markets?
- WHAT IS OPEC?
OPEC is an organisation that plays a major role in managing global oil supply. Its stated aim is to balance the global oil market. It consists of major oil producers, including Saudi Arabia, its de facto leader, and many other Middle East members. In late 2016, Russia joined OPEC+ as a country that participates in OPEC decisions. Together, the cartel accounts for around 40% of global supply, meaning its decisions are expected to impact oil prices.
- OPEC, MARKET SPECULATION, AND OIL PRICES
Ahead of every OPEC+ meeting, rumours and leaks tend to impact the market prices. Reuters has sources that often provide information about possible output decisions, which influence oil prices. In the week before the OPEC+ meeting on November 2nd, reports suggested that OPEC could freeze output at current levels. However, in the days leading up to the meeting, sources told Reuters that the cartel was considering a “modest” increase in output from December. Oil prices ended the week lower.
- OPEC+ MEETING, NOVEMBER 2 OUTPUT DECISION: SAUDI VS RUSSIA
On November 2, OPEC+ met and decided to increase output by 137,000 barrels per day from December - the same rise seen over the previous three months. But the cartel outlined that in the first quarter of next year, it would freeze output at current levels. Leading players Saudi Arabia, which wanted a greater output increase, and Russia, which preferred a small/symbolic increase or a freeze, thus appeared to find a compromise. Russia is facing twin difficulties of selling existing supplies and falling oil revenues, amid lower oil prices.
- OIL PRICES IN 2025: TRADE FEARS, CONCERNS OVER OIL DEMAND OUTWEIGH CONFLICT
Oil prices have fallen some 15% so far this year. Much of the negative impact on prices began when President Trump outlined that the US was prepared to impose tariffs and risk a trade war, rather than threaten one. This culminated in early April when Liberation Day saw US tariffs imposed on multiple countries, sending oil prices to a four-year low, only for some of those tariffs to be suspended days later. While trade deals have now been signed with multiple countries, the uncertainty and increased tariffs have had a negative impact on the global economy and on oil demand.
- IS THE STAGE SET FOR A COMEBACK IN OIL’S PRICE?
Oil prices were given a welcome boost by US oil sanctions on Russia in late October after the commodity spent almost two weeks below the $60 level. And the US has stated it has already drawn up another round of energy sanctions it will hit Russia with if the country doesn’t negotiate with Ukraine soon. Meanwhile, there are persistent reports that the US is building up its forces in the area around oil-rich Venezuela, planning a military engagement against the country. President Trump has confirmed this. The US has also hinted it is looking at potential military action against Iranian groups inside Iraq, OPEC’s second-largest oil producer, which could lead to supply disruption. The US and China are set to sign off on their recently agreed truce, calming trade tensions in a positive signal.
Conclusion
The combination of OPEC+’s decision to increase output, improving global trade prospects, and potential disruptions offers some hope for a rebound in crude oil prices during the last quarter of 2025. The group’s willingness to compromise on supply levels amid ongoing uncertainties shows a pragmatic approach to balance stability with the economic needs of producing nations.
Whether this will mean higher prices depends on global demand recovery and geopolitical developments. If trade tensions continue easing and economic growth accelerates, oil prices could see an upswing. But persistent economic underperformance or renewed conflicts would be negative.