London: OPEC+ has delayed a major review of oil production capacity that will provide a reference for negotiations over members' production quotas from 2027. The delay comes as the war involving Iran has disrupted oil projects in the Middle East and created uncertainty over future production levels.
The review was originally expected to be completed by the end of September. It is now expected to be completed around mid November, according to people familiar with the process.
The assessment is important because OPEC+ plans to use its findings to establish production baselines for 2027. Those baselines will provide a reference for deciding how oil production should be distributed among participating countries.
The review is being carried out with the help of US consultancy DeGolyer and MacNaughton. According to people familiar with the process, Russia, Iran and Venezuela are excluded from the assessment because they are under US sanctions.
The war has made the assessment more difficult because projects intended to increase oil production capacity in some Middle Eastern countries have been delayed. The disruption has raised questions about how much additional oil producers will be able to bring to the market and when that capacity could become available.
The process has also faced an administrative problem. Not all OPEC+ countries have submitted the information required for the assessment, according to people familiar with the matter. The countries that have not yet provided the information have not been publicly identified.
The delay comes at a sensitive time for the global oil market. The International Energy Agency reported that global oil production fell to 100.1 million barrels per day in August, with more than 10 million barrels per day of Gulf production remaining shut in because of security risks.
The agency said the expected recovery in Gulf production has been pushed into 2027. The disruption has added pressure to an oil market already affected by uncertainty over supplies from the region.
In August, OPEC+ agreed to increase production targets by about 188,000 barrels per day from September. The increase completed the planned unwinding of a 1.65 million barrel per day voluntary production reduction agreed in 2023.
However, actual oil supplies have continued to be affected by the conflict and restrictions on exports from the region. This has made it more difficult to assess the difference between a country's sustainable production capacity and the amount of oil it can actually produce and export under current conditions.
The capacity review is also politically important for individual members. Countries whose production capacity has increased could seek higher future production baselines, while producers facing disruption could have a different position in the negotiations.
Iraq has been seeking a higher production allocation and has raised concerns about whether its quota reflects its production capacity. The country has also considered leaving OPEC amid disagreements over production limits.
The United Arab Emirates left OPEC+ in May after previously pushing for greater production freedom to reflect its capacity and investment plans.
OPEC has confirmed that completing the maximum sustainable production capacity assessment is important because it will be used as a reference for 2027 production baselines. The organisation has scheduled its next OPEC and non OPEC Ministerial Meeting for November 29.
Before that, the seven OPEC+ countries involved in the monthly production review are due to meet on October 4. They are Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman.
The October meeting is part of the group's regular production review and is separate from the capacity assessment itself. The capacity assessment is expected to play a larger role in the discussions over production baselines for 2027.
If the assessment is completed around mid November, OPEC+ would have only a short period to consider the findings before its November ministerial meeting.
The exact completion date remains unclear because the mid November timing has not been formally announced by OPEC. It is also not known which countries have yet to provide the required information.
What is clear is that the war has complicated an assessment that was already politically sensitive. OPEC+ needs reliable information about how much oil its members can sustainably produce, but disruptions to infrastructure, exports and expansion projects have made that calculation more difficult.
The outcome of the review will not by itself set the 2027 quotas. Instead, it will provide the production capacity figures that OPEC+ members are expected to use when negotiating how future production baselines and quotas should be distributed.