(Bloomberg) – OPEC+ will increase oil production more rapidly than expected next month as Saudi-led group seeks to capitalize on strong summer demand in its move to regain market share.
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Eight major alliance members agreed to an increase of 548,000 barrels a day at Saturday’s video conference, and the group picked up the pace to unleash the latest power reduction layer a year ago, which was originally outlined. The country had announced an increase of 411,000 barrels each in May, June and July, but three times faster than already scheduled – traders were expecting the same amount in August.
The latest increase amplifies a dramatic strategic pivot by oil exporters and their partner organizations that helped raise oil prices this year. Since April, the group has raised questions about taps from years of power suppression, resuming the tap, an astounding crude trader, and its long-term strategy.
Saturday’s decision was based on “a stable global economic outlook and the foundation of current healthy markets, as reflected in the low oil inventory,” OPEC’s Vienna-based secretariat said in a statement.
The cartel will consider adding around 548,000 barrels in September at its next meeting on August 3rd.
OPEC+ is pushing barrels into a market that is widely expected to be too much supply later this year. Brent Oil Futures withdrew 8.5% in 2025 due to rising alliances and globally rough production, but the threat to economic growth from President Trump’s trade war overshadowed future demand.
Still, the oil foundations quickly appear to be more robust, with some representatives saying the group is partially accelerating supply growth in order to exploit stronger demand during the summer of the Northern Hemisphere. US refiners have been running through the crudeest things since 2019, with prices for some fuels like diesel rising sharply.
Some OPEC+ representatives have provided other explanations for strategy reversal, such as punishing over-production members in the group or reclaiming sales volumes transferred to rivals like US Shale Drillers. Authorities say Riyadh is particularly keen to reopen idle capacity as quickly as possible with a market share drive.
“We are committed to providing a wide range of research services,” said Harry Tchilinguirian, Head of Research at Onyx Capital Group. “It was best to get through it and get it done and just move on.”
Still, the actual increase is likely to be lower. The group is generating production not scheduled for the previous month as Saudi Energy Minister Abdulaziz bin Salman compensates for previous oversupply and pushes some members to refrain from shares of the increase. Nevertheless, Kazakhstan, the worst criminal, continues to pump hundreds of thousands of barrels than its quota.
According to a Bloomberg survey, crude oil traders were very excited to ratify another hike on August 411,000 barrel day. This week’s representative’s initial discussion also focuses on that level.
The extra barrels may be welcomed by President Trump, who has repeatedly sought oil prices to bolster the US economy.
But they are also threatening to inflate the looming supply surplus. Global oil inventories have accumulated at around 1 million barrels per day in recent months. Consumption in China is being cooled during US production rising, from the US to Guyana, Canada and Brazil.
A significant surplus is looming later this year, according to the International Energy Agency in Paris. JPMorgan Chase & Co. Wall Street companies such as Goldman Sachs Group Inc. expect prices to sink below $60 per barrel in the fourth quarter.
Prices jumped during the conflict between Iran and Israel last month, but quickly retreated as it became clear that oil flows would not be affected.
By driving faster supply growth, Saudi Arabia risks offsetting the benefits of increased sales due to the impact of declining oil prices. The kingdom is already tackling a rising fiscal deficit and is forced to cut spending on some of Crown Prince Mohammed Bin Salman’s flagship projects.
Russia, co-leader of OPEC+, faces a growing economic outlook and potential banking crisis as President Vladimir Putin continues his costly war with neighbouring Ukraine.
The decline in prices has also spread pain in the American shale industry. In a recent survey, US Shale executives said they expect significantly fewer wells than planned in early 2025, citing lower oil prices and uncertainty regarding Trump’s tariffs.
“We’ve seen a lot of work in the OPEC office,” said Jorge Leon, an analyst with Rystad Energy A/S.
“Now there are two big questions on the market,” added Leon. “Will OPEC+ target the next tier of 1.66 million barrels?
– Support from Alex Longley and Julian Lee.
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