OPEC+ will raise oil production faster than earlier planned in August, with eight key alliance members agreeing to increase output by 548,000 barrels a day, delegates said on Saturday after a virtual meeting. This is higher than the 411,000-barrel hikes announced for May, June and July, which were already triple the initial plan. Traders had anticipated the same increase for August, making the latest move a further acceleration.
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The Organisation of the Petroleum Exporting Countries and its partners, led by Saudi Arabia, have changed course since April by prioritising market share over price control. The group has begun reviving supply that was previously cut, surprising traders and raising questions about its long-term approach.
Brent crude futures
Brent crude futures have dropped 8.5% in 2025 so far due to the extra supply and concerns around demand amid President Trump’s trade war and its impact on the global economy. Still, delegates said the short-term demand outlook appears stronger, especially in the northern hemisphere’s summer. US refiners are processing the most crude for this time of year since 2019, and diesel prices have surged.
Different reasons have been cited for the sudden shift in strategy—from meeting summer fuel demand to penalising over-producing members and regaining lost market share from US shale drillers. Officials said Saudi Arabia is keen to restart idle capacity quickly.
The larger August hike puts OPEC+ on track to return 2.2 million barrels a day of halted production by September, a full year ahead of the original timeline.
“With OPEC+ having pivoted to a market share over a price defence strategy, it was pointless to keep a notional voluntary cut in place,” said Harry Tchilinguirian, group head of research at Onyx Capital Group. “It was best to get it over and done with it, and simply move on.”
Continues to Produce
However, the actual increase may be smaller. The group has repeatedly failed to hit announced targets, as Saudi Energy Minister Prince Abdulaziz bin Salman urges some members to make up for past oversupply. Kazakhstan, which has regularly exceeded its quota, continues to produce significantly above its assigned levels.
Traders had mostly expected another 411,000-barrel daily hike for August, according to a Bloomberg survey. Initial talks among delegates also leaned in that direction.
China’s Demand
The additional barrels may please President Trump, who has pushed for lower oil prices to support the US economy and wants the Federal Reserve to cut interest rates. But the increase also risks worsening a supply surplus. Oil inventories are growing by around 1 million barrels a day as China’s demand weakens and production rises across the US, Guyana, Canada and Brazil.
According to the International Energy Agency in Paris, markets are likely to face a major surplus later this year. Banks like JPMorgan and Goldman Sachs predict prices could fall towards $60 a barrel or lower by the fourth quarter.
Prices had jumped during last month’s conflict between Iran and Israel but quickly fell again once it was clear that oil supply was not affected.
Budget Deficit
Saudi Arabia now faces the challenge of balancing higher export volumes with the impact of falling prices. The kingdom is already dealing with a ballooning budget deficit and has had to cut spending on Crown Prince Mohammed bin Salman’s major projects.
Meanwhile, OPEC+ co-leader Russia is grappling with a worsening economic outlook and the threat of a banking crisis, as President Vladimir Putin’s war against Ukraine continues to drain resources.
Falling prices are also affecting US shale producers. A recent survey of US shale executives showed they now expect to drill far fewer wells than they had planned at the start of 2025, citing weaker oil prices and uncertainty due to Trump’s tariff policies.
