• OPEC+ is expected to keep production policy unchanged for October, pausing after completing the rollback of voluntary cuts.
  • Geopolitical disruptions, especially in the Strait of Hormuz, limit the group's ability to influence supply and prices.
  • Attention shifts to 2027 quota negotiations, which could test alliance cohesion.

A Pause After the Rollback

OPEC+ is widely expected to leave its production policy unchanged for October, according to sources familiar with the matter. The decision comes after the group completed the reversal of roughly 1.65 million barrels per day of voluntary cuts, a process that began in 2023. The anticipated hold represents a strategic pause rather than a new coordinated reduction, but it may have limited impact on physical supply as geopolitical tensions continue to disrupt exports.

Geopolitical Constraints Weaken OPEC+ Leverage

The alliance's influence on global oil markets has been eroded by conflicts in Iran and Ukraine, which have constrained exports and damaged infrastructure. Reuters (TRI) estimates that OPEC+ now accounts for about 40% of world oil output, down from more than 48% earlier in the year. The Strait of Hormuz, a critical chokepoint for Gulf exports, remains under threat, with recent U.S.-Iran clashes intensifying worries about supply flows.

Oil prices responded more to geopolitical risk than to quota decisions. On September 1, Brent settled at $94.65 per barrel, and WTI at $90.22, as renewed hostilities raised concerns about Gulf shipping. "The market is pricing in a significant risk premium," said one analyst, who asked not to be named. "The actual quota policy is almost secondary to what happens with the conflict."

Market Forces at Play

The current situation is characterized by a two-sided shock: supply is constrained by conflict and shipping disruptions, while demand is weakened by high prices and slower Chinese buying. China has purchased about 400 million fewer barrels since the war began, compared to the same period a year earlier, due to lower refining activity and rising electric-vehicle adoption. This has acted as a cap on crude prices despite severe supply disruptions.

Refined products, particularly diesel, have faced acute shortages, with U.S. diesel futures reaching a 52-month high after a 51% rise over ten weeks. This highlights that product markets can be even more sensitive than crude markets to supply disruptions.

Quota Negotiations Loom

The next big test for OPEC+ will be negotiations over 2027 production quotas, which will hinge on members' claimed and independently assessed sustainable capacity. These discussions are often contentious, as a higher baseline gives a country a larger share of future allowed output. Saudi Arabia, Russia, Iraq, and other members may have diverging incentives depending on their export infrastructure and investment plans.

If quota changes continue to fail to translate into actual barrels available to the market, OPEC+'s ability to manage prices could be further undermined. As one industry expert noted, "China is increasingly the swing demand center, and if producers can't freely export, quota policy becomes largely symbolic."

Outlook

In the short term, a steady October policy should reduce uncertainty, but it won't calm markets if the conflict intensifies. Price direction will depend on whether Gulf exports normalize or deteriorate further, the scale of actual outages, and China's import behavior. The Reuters analyst poll predicts average 2026 Brent prices at $85.08 per barrel, though current spot prices are above that level.

Longer term, the 2027 quota negotiations will test alliance cohesion. High prices may provide fiscal relief for exporters, but lost volumes and higher insurance costs could outweigh benefits for producers with constrained shipments. Central banks face a headache: persistently elevated fuel prices complicate inflation management, even if broader demand is soft.

Correction: An earlier version of this article misstated the percentage decline in OPEC+ output share; it has been updated to reflect Reuters' latest estimates.