HSBC Says OPEC Unlikely to Blink

In a research note sent to Rigzone by the HSBC team this week, HSBC analysts, including Kim Fustier, HSBC’s Senior Global Oil and Gas Analyst, said they are “skeptical that OPEC+ will pause or reverse quota increases”.

“OPEC+ [is] unlikely to blink,” the analysts said in the research note.

“In our view, OPEC+’s move is further confirmation that the group has embraced a market share strategy to regain lost market share vs non-OPEC – at the expense of prices,” they added.

“We are skeptical that OPEC+ will pause or reverse quota increases unless Brent falls significantly, to the mid-$50s per barrel or below,” they continued.

The HSBC analysts highlighted in the note that OPEC+ “announced that it will increase its quota by 137,000 barrels per day for October” in its meeting last Sunday, which the analysts said “surpris[ed]… the market which expected unchanged quotas”.

HSBC analysts revealed in the note that they assume that OPEC+ will unwind 1.65 million barrels per day of cuts over 12 months in their updated supply and demand model. They said in the note that they previously thought OPEC+ “would take a breather after unwinding 2.2 million barrels per day of cuts and wait for 2026 to add more barrels”.

“However, the group seems undeterred by negative demand seasonality and the prospect of a market surplus,” they added.

The analysts stated in the research note that some observers predict that OPEC+ will be unwilling or unable to raise production by the full 1.65 million barrels per day due to capacity constraints or sanctions.

“True, the latter could impede Russia’s ability to raise output,” the analysts highlighted.

“But we see no reason why core Middle East OPEC members including Saudi Arabia and the UAE would not meet their quota hikes. We factor in a 1.5 million barrel per day production increase, not far off quotas,” they added.

The HSBC analysts went on to warn in the note that “the unwinding of OPEC+’s ‘first-phase’ cuts should push up the 2026 surplus to 2.6 million barrels per day” in their estimates, which they highlighted is above their previous prediction of 1.9 million barrels per day.

“One silver lining is that OPEC+’s task will be largely done with few cuts left to unwind beyond 4Q 2026 – four years after implementing the cuts,” they analysts said.

“OPEC+ spare capacity should fall to 3.3 million barrels per day by end of 2026, broadly in line with historical levels,” they added.

HSBC analysts highlighted in the note that oil prices have been “remarkably resilient thanks to summer demand strength and China’s strategic reserves build-up, which has absorbed most of the surplus”.

“As we exit summer and demand drops, inventories should rise but the key question is where stockbuilds will turn up – in China or the OECD,” they added.

The analysts said in the research note that they make no changes to their Brent oil price assumption, which they highlighted remains at $65 per barrel in the fourth quarter of 2025 and from 2026 onwards.

“There could be downside risk to our forecast if stockbuilds materialize in the West, or if OPEC+ continues hiking production,” they warned.

In a report sent to Rigzone by the Standard Chartered team on Wednesday, analysts at Standard Chartered Bank, including the company’s Global Head of Commodities Research Suki Cooper and the company’s Head of Energy Research Emily Ashford, outlined that OPEC+’s 137,000 barrel per day production adjustment announcement “suggests an equal split of the total 1.65 million barrels per day over 12 months”.

The Standard Chartered Bank analysts went on to outline in the report that, in their view, OPEC+ decided to “accelerate the unwinding” of the 1.65 million barrel per day portion because of a few reasons.

“In our view, the OPEC+ eight acted to accelerate the unwinding of this next tranche because (1) the forward curve still shows a brief period of backwardation, although this only lasts until around October 2026 before the curve moves into contango; (2) the overproduction compensation schedule effectively negates production increases, if compliance is high; and (3) they intend to remain highly reactive to market conditions, with monthly adjustments that may include increases, pauses or indeed rolling back of increases,” they said in the report.

“We still believe that monthly scrutiny will make it increasingly clear which members are able to increase their output in a sustainable way, and where true spare capacity lies,” they added.

“Adjustments in the market structure of the forward curve and compliance from Iraq may be the most significant determinants in the format of the unwinding on a month-by-month basis, at least in the near term,” they continued.

In the report, Standard Chartered projected that the ICE Brent nearby future crude oil price will average $65 per barrel in the fourth quarter of this year, $61 per barrel overall in 2025, and $78 per barrel overall in 2026.

Rigzone has contacted OPEC for comment on the HSBC and Standard Chartered reports. At the time of writing, OPEC has not responded to Rigzone.

A statement posted on OPEC’s website on Sunday revealed that Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman “decided to implement a production adjustment of 137,000 barrels per day” at a virtual meeting on September 7.

“The eight OPEC+ countries, which previously announced additional voluntary adjustments in April and November 2023 … met virtually on 7 September 2025 to review global market conditions and outlook,” the statement noted.

“In view of a steady global economic outlook and current healthy market fundamentals, as reflected in the low oil inventories, the eight participating countries decided to implement a production adjustment of 137,000 barrels per day from the 1.65 million barrels per day additional voluntary adjustments announced in April 2023,” it added.

This adjustment will be implemented in October 2025, the statement said.

“The 1.65 million barrels per day may be returned in part or in full subject to evolving market conditions and in a gradual manner,” the statement posted on OPEC’s site noted.

“The countries will continue to closely monitor and assess market conditions, and in their continuous efforts to support market stability, they reaffirmed the importance of adopting a cautious approach and retaining full flexibility to pause or reverse the additional voluntary production adjustments, including the previously implemented voluntary adjustments of the 2.2 million barrels per day announced in November 2023,” it added.

“The eight OPEC+ countries also noted that this measure will provide an opportunity for the participating countries to accelerate their compensation,” it continued.

“The eight countries reiterated their collective commitment to achieve full conformity with the Declaration of Cooperation, including the additional voluntary production adjustments that will be monitored by the Joint Ministerial Monitoring Committee (JMMC),” the statement went on to note.

The countries also “confirmed their intention to fully compensate for any overproduced volume since January 2024”, according to the statement, which noted that the eight OPEC+ countries will hold monthly meetings to review market conditions, conformity, and compensation. The statement revealed that the eight countries will meet again on October 5.

To contact the author, email andreas.exarheas@rigzone.com