OPEC+ has decided to keep its current production cuts in place until the end of the first quarter of 2026. Starting in 2027, they will introduce a new quota system based on production capacity, with data collected by a consulting firm from Dallas. The Joint Ministerial Monitoring Committee will meet every two months and may hold extra meetings as needed. Challenges could arise since some member countries, like Iraq and Kazakhstan, might want to boost production, while others have already hit their limits.

Discrepancies Among Member Countries

Disagreements among member countries may lead to issues. Some nations may boost production while others struggle to keep up with current quotas. The new system aims to address these differences and create fair production targets. OPEC+ has officially extended production cuts through the first quarter of 2026. This reduces the immediate risk of a price drop due to oversupply this winter. It suggests a cautiously optimistic outlook for crude oil prices, reinforcing a support level for oil and urging traders to rethink any significant short positions. Today, December 2nd, 2025, WTI crude is trading around $88 per barrel, boosted by this decision and recent inventory figures. The latest data from the Energy Information Administration indicated a larger-than-expected decrease in U.S. crude stocks, showing that demand remains strong as the cold months approach. This solid background, combined with OPEC+’s supply discipline, supports oil prices staying in the $85-$95 range.

Volatility and Market Strategies

Since the OPEC+ announcement was anticipated, we expect implied volatility to decrease in the coming weeks. Traders might want to take advantage of this by selling out-of-the-money put options on February and March 2026 contracts to earn premiums. A similar pattern occurred after the June 2024 meeting, where volatility dropped significantly once the decision uncertainty was resolved. Bringing in an external consultant and postponing the 2027 quota discussions is a smart way to maintain unity for now. It delays potential price conflicts and ensures stability in the market at least through the first half of 2026. However, the tension between countries that want to increase capacity and those that don’t will likely resurface, posing risks for positions held beyond the next two quarters. Create your live VT Markets account and start trading now.

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