Jan 8, 2026
OPEC+ compensation cuts triple as major producers act to control oversupply.
Four major Opec+ producers have committed to increasing their compensation cuts in the first half of 2026 to strengthen compliance amid oversupplied oil markets. The UAE, Iraq, Kazakhstan, and Oman will implement output reductions totaling 829,000 barrels per day by June, which is three times their earlier commitment. Kazakhstan's reduction will be the largest, decreasing by 669,000 bpd compared to a prior 131,000 bpd; Iraq will maintain its cuts at 100,000 bpd by midyear; the UAE will raise its cuts to 55,000 bpd from 10,000 bpd; and Oman will reduce output by about 5,700 bpd through June.
These commitments follow an OPEC+ decision earlier this month to halt the planned reduction of its voluntary cuts, which total 2.9 million barrels per day, keeping that volume off the market for the first half of the year. This decision indicates increasing caution regarding supply balances, as strong production growth from non-OPEC sources continues to affect prices and complicate compliance within the group.
Global oil markets are anticipated to remain oversupplied in 2026 due to strong production growth from non-OPEC+ countries and modest demand increases below historical trends. The United States, Brazil, Canada, Guyana, and Argentina are expected to lead non-OPEC+ supply growth as new projects begin operating and efficiency improves. U.S. crude production is projected to stay close to record levels after reaching an all-time high of 13.87 million barrels per day in October, driven by ongoing shale production and growth in the Gulf of Mexico, even as Texas sees a decline in output.
Oil demand growth in 2026 is projected to be modest compared to historical averages, influenced by a challenging macroeconomic environment, better vehicle efficiency, and increased electric vehicle use in major economies. These factors have led to periods of inventory buildup in global markets, including higher visible stocks in certain parts of Asia.
These commitments follow an OPEC+ decision earlier this month to halt the planned reduction of its voluntary cuts, which total 2.9 million barrels per day, keeping that volume off the market for the first half of the year. This decision indicates increasing caution regarding supply balances, as strong production growth from non-OPEC sources continues to affect prices and complicate compliance within the group.
Global oil markets are anticipated to remain oversupplied in 2026 due to strong production growth from non-OPEC+ countries and modest demand increases below historical trends. The United States, Brazil, Canada, Guyana, and Argentina are expected to lead non-OPEC+ supply growth as new projects begin operating and efficiency improves. U.S. crude production is projected to stay close to record levels after reaching an all-time high of 13.87 million barrels per day in October, driven by ongoing shale production and growth in the Gulf of Mexico, even as Texas sees a decline in output.
Oil demand growth in 2026 is projected to be modest compared to historical averages, influenced by a challenging macroeconomic environment, better vehicle efficiency, and increased electric vehicle use in major economies. These factors have led to periods of inventory buildup in global markets, including higher visible stocks in certain parts of Asia.