When the OPEC+ ministers meet this weekend, they face an unpleasant choice: either continue to restrict oil supply until 2025 or risk another crash in oil prices.

As china's oil demand slows and supply surges across the americas, representatives indicated that OPEC+, led by Saudi Arabia and Russia, will discuss postponing the production increase plan, potentially delaying it for several months.

However, if OPEC+ wants to prevent a supply surplus, it may need to do more. The International Energy Agency (IEA) predicts that even if the alliance completely cancels the production increase, a supply surplus will occur next year. Citigroup and jpmorgan warned that Brent crude oil prices could crash from $73 per barrel to $60, and prices would fall further if OPEC+ opens the taps.

Another sell-off in the oil market would impact Saudi Arabia's financial situation, which has already been forced to cut spending on lavish economic transformation plans. This does not even take into account the potential impact of President Trump's return on the oil market. Trump has promised to increase us crude oil production and threatened to impose punitive tariffs on china.

Torbjörn Törnqvist, co-founder and CEO of Gunvor Group, stated at the energy asia vets forum held in London on Tuesday: "I believe they have no room to increase (production); the market will remind them when necessary."

Earlier that day, Saudi Energy Minister Prince Abdulaziz bin Salman met with Russian Deputy Prime Minister Alexander Novak and Iraqi Prime Minister Mohammed al-Sudani in Baghdad. According to statements from the countries, they discussed the importance of maintaining market balance and fulfilling production cut commitments. This alliance of 23 countries will hold an online meeting on Sunday.

OPEC+ is in trouble.

When OPEC and its allies held a meeting nearly six months ago, the situation was very different from now. The alliance believed that the surge in global oil consumption after the COVID-19 pandemic would continue, thus announcing a roadmap to restore production cuts made since 2022, planning to increase output by 2.2 million barrels per day starting in October.

But things have changed since then.

Since early July, Brent crude oil futures have fallen by about 17%, unaffected by the Middle Eastern conflict, while China's oil demand has contracted for six consecutive months. According to the IEA, China's consumption, which has driven the oil market for the past twenty years, may have peaked.

This Paris-based institution predicts that with the acceleration of the electrification transition, global oil demand will grow by about 1 million barrels per day next year, less than half of that in 2023.

The report states that a new wave of supply from the USA, Brazil, Canada, and Guyana will overshadow this figure, and the daily surplus in the oil market will exceed 1 million barrels.

JPMorgan analyst Martijn Rats stated, "The oil market seems poised to experience a significant surplus by 2025."

Even before the oil market digests the impact of Trump's second term, the outlook for OPEC+ has already been worrying. Trump promised to encourage oil production in the USA and warned of harsh trade tariffs on some countries, including china.

Nevertheless, predictions can also be wrong, and if the oil market avoids the put forecasts, it will make it easier for OPEC+ to resume increasing production.

Murray Auchincloss, CEO of bp plc, stated at a meeting in London on Monday that global oil demand will continue to rise unexpectedly, and looks set to grow strongly over the next 5 to 10 years.

Jeff Currie, chief global strategy officer of the carlyle group, said that oil prices are currently "trying to price in a future oversupply that has yet to arrive." The pullback in oil prices has eroded the outlook for supply growth and reduced the likelihood of achieving an oversupply.

Currie said: "Any possibility of a bear market in oil is demand-driven, and with china having implemented stimulus measures, the likelihood of an unexpected demand shock is limited."

Another scenario supporting oil prices is that Trump may restart his "maximum pressure" policy used during his first term to curb iran's crude oil exports to limit the country's nuclear program.

"If Trump now really goes all out to reduce iranian oil exports by 1 million to 1.2 million barrels a day, it would eliminate the oversupply by next year," said Bob McNally, founder of Rapidan Energy Group and former White House official. "This makes it easier for OPEC+ to increase production."

However, if the USA does not restrict iranian crude oil, OPEC+ may need to stick to production cuts. This will pose a challenge for several member countries, especially iraq, russia, kazakhstan, and the uae, which have been struggling to implement the supply limits they were supposed to enforce at the beginning of this year.

Given the recent increase in production capacity, the UAE will be allowed to gradually increase its additional output by 0.3 million barrels per day. However, Kazakhstan does not have such authorization and has already begun large-scale expansion of the Tengiz oilfield, which could further test its commitment to the jpmorgan+ agreement next year.

Natasha Kaneva, Head of Global Commodity Research at jpmorgan, stated that the longer the oil market experiences oversupply, the more likely jpmorgan+ member countries will ultimately tire of production quotas and seek to regain individual market share, just as they did during the policy 'reset' periods in 2014 and 2020.

She said, 'In 2026, increasing oil production may become a major consideration for some jpmorgan members,' at which point 'the risk of a market reset will be higher.'