Why oil producers are adding to the global supply glut despite low crude prices

By Myra P. Saefong

Global crude-oil producers are betting on a stronger U.S. economy in 2026

OPEC and its allies, together known as OPEC+, have been gradually increasing their oil output quotas since April.

With U.S. crude-oil prices hovering below the often critical $60 threshold, you might think it'd be a good time to tackle the glut of oil supply sloshing through global markets.

Yet the major oil producers known as OPEC+ chose to end some of their previous output cuts faster than expected in 2025 - increasing production quotas from April to December of this year, despite global benchmark prices having dropped around 16% year to date.

It's all about planning ahead, according to Josh Young, chief investment officer for fund manager Bison Interests. The moves by OPEC, or the Organization of the Petroleum Exporting Countries, and its allies make sense given the group's goal of stabilizing oil markets, Young wrote on Tuesday as author of the Bison Insights newsletter.

This chart from Bison Insights shows that in recent years, OPEC+, as OPEC and its allies are known, agreed to production cuts when oil prices were higher than they are today.

"It's important to skate to where the puck is going, not where it is today," Young said. Oil prices are currently low, but the group's members are signaling that they see "robust demand ahead, and that they are increasing production now to try to ensure stable, modestly high prices in the future."

'It's important to skate to where the puck is going, not where it is today.'Joshua Young, Bison Insights

In 2026, consumer spending, an improving investment outlook and ongoing monetary easing during a de-escalation of trade tensions are expected to support economic activity in the U.S., OPEC said in a monthly report released in November. That, in turn, is expected to drive further oil demand.

Oil prices, however, have traded lower year to date, with the International Energy Agency predicting an oil supply surplus of around 4 million barrels per day in 2026.

Global benchmark Brent crude (BRN00) settled Tuesday at $62.45 a barrel on ICE Futures Europe, down 1.1% for the session. Brent prices in October had traded below $61, their lowest level since May. U.S. benchmark West Texas Intermediate crude (CL00) (CL.1) settled at $58.64 a barrel on the New York Mercantile Exchange, down nearly 1.2% for the session. WTI prices in October had dipped under $57, also their lowest level since May.

Extremely high prices would benefit OPEC+ member countries in the short term, but the "ensuing demand destruction and supply builds that follow are damaging to the group over the long run," Young noted.

OPEC+'s recent actions and statements suggest it is trying to "avoid that extreme scenario by adding supply now, into the wave of demand that is now starting to show up in the data - indicating that we're in the early stages of the next upcycle in oil," he added.

-Myra P. Saefong

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