The upcoming OPEC+ meeting will focus on small details rather than changing short-term production strategies, which will likely have little effect on oil prices. Ongoing peace talks about Ukraine could impact the market; if a ceasefire occurs, sanctions might be eased or lifted, but a quick resolution seems unlikely. Brent crude oil prices have held steady between USD 60 and 65 per barrel since early October. OPEC+ intends to keep its current production targets until December 2026, and countries with voluntary production cuts will not increase output in the first quarter. Therefore, short-term production discussions are not on the agenda.

Unity and Strength in OPEC+

Limiting a member country too much could lead to its exit from OPEC+, like Angola did two years ago. To prevent this, slight quota increases for countries such as Iraq might be considered. Keeping unity and strength is crucial for the alliance. The OPEC+ meeting this Sunday is not expected to significantly influence oil prices in the coming weeks. Instead, derivative traders should pay closer attention to the delicate peace talks regarding the war in Ukraine. Any surprising outcome from these negotiations — whether good or bad — could create greater price volatility than the OPEC+ meeting. Brent crude has traded in a narrow range of $60 to $65 per barrel since early October, as the market weighs OPEC+ supply management against other factors. Record U.S. shale output, confirmed by the Energy Information Administration (EIA) to exceed 13.5 million barrels per day, keeps a strong cap on prices. This non-OPEC supply pressure contributes to the stability we see. This market calm is evident in derivatives pricing. The CBOE Crude Oil Volatility Index (OVX) has dropped to multi-month lows below 30. Such low implied volatility makes option-selling strategies appealing for near-term profits from steady prices. However, this period of quiet could change quickly if geopolitical events arise.

Risks from Geopolitical Surprises

The biggest immediate risk is a sudden peace deal, which could cause prices to fall below the $60 support level as sanctions may be lifted. For this reason, we see value in holding some inexpensive, out-of-the-money puts on Brent futures. This serves as a low-cost insurance policy against a positive geopolitical surprise that the market isn’t currently ready for. Within OPEC+, we anticipate that the group will prioritize unity, especially after witnessing Angola’s departure from the cartel two years ago due to quota disagreements. Any adjustments, like a slight increase for Iraq, would be a compromise to keep the alliance strong, not a shift in strategy. This strengthens our belief that the meeting will likely maintain the current situation until the first quarter of 2026. Create your live VT Markets account and start trading now.

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