Oil price rise: OPEC Meet along with Balance Supply with Demand, Small Hike, and Supply Glut Concerns

Introduction:

Crude oil is an essential component of the oil and gas industry. Especially the industries like automotive and transportation, chemical and materials are one those who fully dependent on this crude oil reverse. Further, one significant element influencing oil prices is the Organisation of the Petroleum Exporting Countries' (OPEC) production of crude oil. By establishing production targets, or caps on the amount of oil that each nation can produce, OPEC aims to actively control oil production among its members. Currently, ongoing concerns about an impending supply glut, OPEC+ announced that it will increase oil production from November by 137,000 barrels per day (bpd), choosing to go with the same relatively modest monthly increase as in October.  Organisation of the Petroleum Exporting Countries, Russia, and a few smaller producers have raised their oil production targets by over 2.7 million barrels per day, or roughly 2.5 per cent of the world's demand.

Glossary of Crude Oil:

Crude oil is a natural, unprocessed fossil fuel, consisting of a complex blend of liquid hydrocarbons located in subterranean reserves. The word "crude" describes its unrefined condition prior to being processed into valuable items such as gasoline, kerosene, and asphalt. Crude oil is a natural, unprocessed blend of hydrocarbons and other organic matter located in subterranean reservoirs, functioning as a fossil fuel and processed into valuable products such as gasoline and diesel. The precise chemical makeup of crude oil differs significantly based on its geographic origin, resulting in various characteristics. It mainly consists of hydrocarbons but also has trace amounts of nitrogen, oxygen, and sulfur. Oil and oil-related content-dependent sectors are following: transportation, petrochemicals & plastics, agriculture and pharmaceuticals, construction and infrastructure, utilities/power generation.

 

Market Statistics:

• Global crude oil output fell by 0.77 million barrels per day (mb/d), or 1.0%, in 2024, in comparison to 2023. This signified the initial yearly decline, after three successive yearly rises since 2020, achieving an average of 72.58 mb/d. Crude oil output from OPEC member states.

 

• Nations and non-OPEC oil-producing nations involved in the Cooperation Agreement (DoC) decreased, year-over-year (y-o-y), by 0.57 mb/d, or 2.1%, and by 0.78 mb/d, or 5.2%, respectively, while crude output from non-DoC nations increased by 0.58 mb/d, or 1.8%.

 

• Global oil consumption increased by 1.49 mb/d, year-on-year, or 1.5%, arriving at an average of 103.84 mb/d in 2024.

 

• Oil demand increased annually in nearly all areas, with the most significant increases seen in non-OECD Asia. China, India, the Middle East, Africa, Latin America, and Europe are in the OECD. OPEC Member oil consumption.

 

• Global refining capacity grew in 2024 by 1.04 mb/d, year-on-year, reaching 103.80 mb/d. It seems that your message got cut off.

 

• The non-OECD area, especially China, India, and the Middle East, saw increases in refining capacity.

 

• In OECD Americas, it was counterbalanced by closures in OECD Europe and OECD Asia Pacific. Worldwide, oil refinery throughput rose by 0.52 mb/d, or 0.6%, reaching 85.97 mb/d in 2024, fueled by increased run rates.

 

• Among OPEC members, Saudi Arabia produces the crudest oil, and in 2024, it received the lion's share of the organisation's crude oil export earnings. About one-third of all OPEC crude oil export earnings, or $179 billion, came from Saudi Arabia.

 

What is OPEC?

The Organisation of the Petroleum Exporting Countries (OPEC) is an assembly of oil-producing countries that collaborate on policies to oversee the supply and pricing of oil in the international market. Established in 1960, its main members consist of nations such as Saudi Arabia, Iran, Iraq, and Venezuela. OPEC significantly impacts the oil and gas sector by establishing production goals for its members, which can affect worldwide oil prices.

 

Its Importance in the Oil and Gas Industry:

According to Vortexa Analytics, OPEC nations together generate approximately 35% of global crude oil, with their oil exports comprising about 50% of all oil traded worldwide. OPEC's substantial market share provides it with significant leverage, enabling its decisions to greatly impact global oil prices. For example, any indications of alterations in crude oil production from Saudi Arabia, the largest crude producer in OPEC and the world's leading crude exporter, frequently cause waves in the market. The crude oil output of the Organisation of the Petroleum Exporting Countries (OPEC) significantly influences oil prices. OPEC aims to actively regulate oil output among its member nations by establishing production quotas and restrictions on the amount of oil each nation is allowed to produce. Historically, oil prices generally rise when OPEC lowers its production targets. OPEC’s spare crude oil production capacity, extra oil production that can be swiftly accessed to address supply issues, also affects global crude prices and acts as a signal of oil market constriction and the level of upward pressure OPEC is applying on prices.

 

OPEC Revenue Statistics:

• In 2024, OPEC countries generated approximately $550 billion from crude oil exports, reflecting a 9%, or $55 billion (nominal $) decrease compared to 2023. The revenue slope was due to a reduction in both crude oil prices and OPEC crude oil output last year.

 

• From 2010 to 2024, crude oil prices have been the main factor influencing OPEC crude oil revenues. OPEC's crude oil output has fluctuated between 11% above and 10% below its 2010 average of 26.9 million barrels per day. The Brent crude oil price has experienced even greater changes, ranging from 40% above to 48% below the 2010 price of $79.54 per barrel (b).

 

• OPEC crude oil export earnings will keep decreasing in 2025 and 2026, coinciding with the anticipated drop in crude oil prices during that timeframe. OPEC's crude oil export earnings, not accounting for inflation, will drop to $455 billion in 2025 and $410 billion in 2026.

 

 

The reason behind such upscale:

The Organisation of the Petroleum Exporting Countries (OPEC) oversees oil production mainly to stabilise the worldwide oil market by aligning supply and demand. In recent years, OPEC and its broader coalition, OPEC+, have enforced production cuts to curb oversupply, bolster oil prices, and uphold market stability. These synchronised production changes aid in averting sharp price fluctuations and guarantee stable incomes for member nations. In anticipation of 2025, OPEC+ intends to slowly ramp up production from April, following years of major reductions, signalling enhanced market conditions and a stronger economic forecast. This growth will be careful and adaptable to changing market conditions to maintain stability in oil prices. In general, OPEC’s production choices are intended to manage crude oil inventory levels, uphold prices within a targeted range, and preserve its unified market power during geopolitical and economic instabilities. This approach includes guaranteeing member adherence to quotas to preserve group unity and efficiency in influencing market expectations.

 

Interpreting the Movement of the price of oil and its upsurge.

Among market participants, a significant increase in supply seems to have diminished following the group's announcement of its production decision. The output increase being lower than anticipated might have prompted some to hedge against short positions in Oil prices, potentially contributing to the rally. The rally was still appreciated following the 8% drop from last week. Brent crude closed slightly over the $65 per barrel mark, approximately $65.30, a threshold that numerous traders consider a psychological limit. This price increase resembles the one observed following the previous OPEC+ meeting, albeit more as a market's sigh of relief. OPEC+ effectively handled immediate price fluctuations, but the long-term perspective is still influenced by considerable structural pessimism. Market sentiment remains fundamentally dampened by "persistent worries regarding oversupply anticipated through 2026. That concern largely stems from significant increases in non-OPEC production, such as the spike in shale rigs in Texas and the new offshore wells in Brazil. Those sources are beyond the cartel’s cap system, leading OPEC+ to engage in a tactical cut battle while the rest of the globe continues to increase output.

 

Its price volatility impact on the Indian crude oil business:

 

Current Statistics:

• India imports a lot of crude oil to meet its needs. India imported approximately 4.88 million barrels of crude oil per day (bpd) during the fiscal year 2024–2025, which ended in March 2025.

 

• In 2024, OPEC's proportion of India's crude imports rose from approximately 49.6% in 2023 to approximately 51.5%. Leading OPEC+ nations Saudi Arabia, Russia, Iraq, and the United Arab Emirates expanded their oil exports to India in May 2025, increasing their combined market share in India to approximately 78%.

 

The fluctuations in OPEC's oil production greatly affect the Indian crude oil industry because India relies heavily on oil imports, totalling around 80-90%. Variations in OPEC's output influence crude oil price instability worldwide, directly impacting India's import expenses. When OPEC reduces production to boost prices, crude oil prices increase, elevating India’s fuel and energy expenses, which in turn heightens inflationary pressures and expands the trade deficit. Concurrently, when OPEC raises production, prices usually decline, offering temporary relief to India’s economy. Nonetheless, this volatility also leads to unpredictability in business strategy and government financial policies. Additionally, fluctuations in prices can affect the rupee-dollar exchange rate, overseas investment, and the financial stability of Indian oil firms and refineries. This instability highlights the importance of India to expand its energy sources and suppliers. As India is projected to account for almost 25% of the worldwide crude demand increase in 2025, OPEC's production choices are vital for influencing energy security and economic stability in India.

 

Final Wrapping up:

OPEC+’s choice to slightly raise oil production by 137,000 barrels daily beginning in November 2025 demonstrates a careful strategy to balance worldwide supply and demand in light of worries about a possible supply surplus. This regulated rise seeks to uphold market stability and regain market share without causing sudden price drops. Although the shift offers some comfort to markets, long-term oil prices continue to be affected by worries of oversupply, increasing non-OPEC output, and geopolitical instability. India, which depends significantly on crude imports from OPEC countries, sees these production choices directly influencing import expenses, inflation, and economic stability. Consequently, OPEC+’s control over production remains crucial in influencing global energy markets and the energy security perspective of India.

 

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