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(Reuters) – Barclays on Monday lowered its Brent crude oil price forecast for 2026 by $4 to $66 a barrel, citing expectations that OPEC+ will fully unwind voluntary production cuts by September next year.
The bank said OPEC+’s weekend decision to raise October production targets by 137,000 barrels per day (bpd) was “the group initiating the unwind of its initial voluntary adjustments that came into effect in May 2023.”
At this pace, the bank noted, OPEC+ would complete the full rollback of 1.66 million bpd in cuts within 12 months.
“Market reaction suggests some relief that the pace of unwind would be a lot slower than recently,” Barclays said, pointing out that in August and September the group raised aggregate targets at four times the pace announced for October.
“The resilience in spot fundamentals and a wide valuation gap have been key drivers of our constructive view on oil markets since early July,” the bank said.
The weekend deal also set in motion unwinding a second tranche of cuts of about 1.65 million bpd, more than a year ahead of schedule. OPEC+ has already fully unwound a first tranche of 2.5 million bpd since April, equivalent to about 2.4% of global demand.
Saudi Arabia, the world’s top oil exporter, cut the official selling price for the Arab Light crude it sells to Asia a day after OPEC+ producers agreed the output hike.
OPEC on Monday released a compensation schedule from six of its members covering the period from last month and until June next year to make up for producing above their targets.
Oil prices have held strong despite the increases, supported by Western sanctions on Russia and Iran and as actual production rises from the group lag the headline increase.
Brent crude was up 53 cents, or 0.81%, to $66.03 a barrel by 1:15 p.m. EDT on Monday, while U.S. West Texas Intermediate crude rose 45 cents, or 0.73% to $62.32 a barrel.
Reporting by Sherin Elizabeth Varghese and Anushree Mukherjee in Bengaluru; Editing by Susan Fenton
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