OPEC+ plans to boost oil production, risking oversupply and lower prices

OPEC+ plans to increase oil production by 548,000 barrels per day next month, aiming to capitalize on strong summer demand and regain market share. This decision accelerates the group’s shift from output restraint to reopening taps, despite expectations of an oversupplied market later this year. Prices have dropped 8.5% in 2025.

The cartel may add another 548,000 barrels per day in September, completing the revival of 2.2 million barrels per day of supply cuts announced in 2023. OPEC+ is pushing to take advantage of current strong demand, especially during the northern hemisphere summer. Refiners in the US are using the most crude since 2019.

Some delegates suggest the strategy change is to penalize over-producing members and regain market share lost to US shale drillers. Riyadh is particularly eager to restart idle capacity quickly. The actual increase may be lower due to some members producing less than scheduled. Saudi Arabia is pressuring others to compensate for earlier oversupply.

President Trump, who wants lower oil prices to boost the US economy, may welcome the extra barrels. However, a supply surplus is looming as global oil inventories grow at a rate of 1 million barrels per day. Wall Street firms anticipate prices may drop towards $60 a barrel or lower in the fourth quarter. Prices rose during Iran-Israel conflict but fell back when oil flows were unaffected.

Saudi Arabia risks offsetting higher sales volumes with falling oil prices by increasing supply faster. This could impact its budget deficit and lead to cuts in spending on key projects. Russia, OPEC+ co-leader, faces economic challenges and a potential banking crisis due to ongoing conflict with Ukraine. American shale industry is also feeling the impact of lower oil prices.

OPEC+ is shifting towards a market share strategy, aiming to increase supply quickly. Questions remain over whether the group will target the next tier of 1.66 million barrels and if there is enough demand to absorb it. Uncertainty surrounds the future of oil prices and market dynamics as supply increases and economic pressures persist.

Read more at Yahoo Finance: OPEC+ will boost supply even faster with larger August hike