The OPEC+ coalition tightened its outlook for global oil markets this year and next as members struggle to reach output targets. 

The alliance’s committee of technical experts slashed forecasts for this year’s supply surplus in half, to 400,000 barrels a day, according to a report from the panel. It flipped projections for next year from an overhang of 900,000 barrels a day to a deficit of 300,000 a day. 

At the same time, the Joint Technical Committee -- which analyzes markets on behalf of ministers who meet on Monday -- also endorsed a recent declaration from group leader Saudi Arabia that they’re prepared to resolve a growing disconnect in global oil markets by curtailing supply.

Oil prices have slumped for three months in a row, their longest run of declines since 2020, on concerns that slowing economic growth in China and tighter monetary policy in the US could curtail fuel demand. Futures traded near US$89 a barrel in New York on Wednesday.

Last week, Saudi Arabian Energy Minister Prince Abdulaziz bin Salman warned that a lack of liquidity in futures markets means they’re failing to adequately reflect the fundamentals of supply and demand. 

The prince added the Organization of Petroleum Exporting Countries -- which revived world markets during 2020’s COVID slump with massive output cuts -- is again prepared to trim supplies. Many OPEC+ nations have since rallied behind his call, which was given further support Wednesday by the JTC.

Still, with fuel prices high and inflation rampant, many analysts expect the 23-nation OPEC+ coalition may hold off any action for now. 

As recently as July, US President Joe Biden was urging producers to open the taps further, a plea that OPEC+ met with a symbolic boost of just 100,000 barrels a day. The group explained that it had to deploy its limited spare supplies with caution, in case world markets are hit with fresh disruptions.

The more bullish outlook from the committee may give further reason to tread carefully.

The JTC’s revisions stem from a change in methodology. Until now the committee has assumed members will produce in line with their quotas, even as they lag several million barrels below while underinvestment and sanctions crimp output from Angola to Russia.

With the updated numbers, world markets look considerably tighter than previously anticipated. Oil stockpiles in developed nations are set to remain below the average for the period from 2015 to 2019 for the rest of this year and next, the report showed.