Geopolitical tensions overshadowing production cuts: OPEC+ maintains quotas unchanged, paper adjustments fail to resolve physical supply dilemmas

It was reported by Zhitong Finance APP that the main oil-producing countries of OPEC+, led by Saudi Arabia and Russia, held a monthly video conference last Sunday, deciding to keep the October crude oil production quota unchanged, continuing a steady production tone following a series of symbolic production increases. The Organization of the Petroleum Exporting Countries (OPEC) stated in a release that the Joint Ministerial Monitoring Committee (JMMC), composed of seven countries, confirmed the continuation of the established roadmap to maintain production targets unchanged until the end of the year.

At present, the US-Iran conflict continues to escalate, and severe impediments to passage through the Strait of Hormuz have severely restricted crude oil exports from Persian Gulf countries. Although some countries strive to maintain exports via alternate pipelines and covert shuttle transport, geopolitical risks have, in essence, weakened the immediate impact of OPEC+ production decisions on the market. Notably, the alliance has continued to implement quota increases during the period of hostilities, nominally completing a full reversal of the 2023 production cuts and reserving policy space for potential increases from some members once conflicts subside.

Although OPEC+ theoretically retains an additional tranche of production capacity to be restored, real resumption of output is proving significantly more difficult—since the production restriction agreement was launched, the capacity of many countries has substantially declined, with war further complicating the supply structure.

Last week, US President Trump ordered a new round of strikes on Iranian facilities, and Iran immediately retaliated against US military bases in the Middle East, causing another escalation in regional tensions and dramatic volatility in international oil prices.

“Currently, OPEC+ production adjustments are more a matter of paper quota changes rather than real shifts in the flow of the physical market,” said Jorge Leon, head of geopolitical analysis at Rystad Energy and former OPEC Secretariat official. “The real impact will depend on when the Strait of Hormuz fully reopens—at that time, the alliance may need to quickly switch from the ‘supply management’ mode, which governs limited exports, to a ‘risk mitigation’ mode to deal with potential supply surpluses.”

The next monthly JMMC meeting is scheduled for October 4.

OPEC+’s next core task is to conduct a comprehensive audit of the actual production capacity of each member state, and the results will serve as the basis for calculating production quotas for 2027. The review is scheduled for completion by the end of this month and will be submitted for final discussion at the full ministerial meeting in late November.

“The market’s main focus is shifting from monthly production fine-tuning to the more crucial and far-reaching struggle over 2027 capacity quotas,” Leon pointed out. “This round of assessment will be much more complex than before and extremely politically sensitive.”