“The eight participating countries in the meeting will implement a production adjustment of 548,000 barrels per day in August 2025,” compared to July, surpassing the initially forecasted 411,000 by analysts, announced the Organization of the Petroleum Exporting Countries (OPEC) in a statement referenced by Agence France-Presse (AFP).
This latest increase clearly confirms that “the group is steadily moving towards a market share strategy,” said Jorge Leon of Rystad Energy to AFP.
This increase was “unthinkable a few months ago,” added the analyst, occurring after three consecutive quota increases of 411,000 barrels per day in May, June, and July, marking a significant shift in the group’s production strategy.
To combat price erosion, the group has been reducing supply since late 2022 through several production cuts.
One such cut, amounting to 2.2 million barrels per day, agreed upon by Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman, is currently being reintroduced to the market.
In recent months, the group seems to have abandoned its price target of around 80 euros.
Brent crude, which traded at about $75 at the beginning of the year, is now trading between $65 and $70.
To justify their decision, OPEC+ highlighted “the stability of the global economic outlook and the current good health of market fundamentals, as evidenced by low oil stock levels.”
However, the failure of some member countries, such as Kazakhstan and Iraq, to meet quotas “supports the decision,” said UBS analyst Giovanni Staunovo to AFP.
By opening the floodgates, Saudi Arabia, the most influential country in the group, would effectively pressure members exceeding their production targets, reducing profits and limiting the capacity of some members to produce more than their quotas.
In May, according to a Bloomberg estimate, the cartel’s production increased by only 200,000 barrels, despite the quota increase of 411,000 barrels.
In June, the 12-day war between Iran and Israel shook the oil market, briefly raising the Brent crude price above $80, as the market feared a supply disruption in the Strait of Hormuz, through which 20% of the world’s crude passes.
The threat did not materialize, but the war reinforced OPEC+’s decision to proceed with the production increase.
The eight countries will convene on August 3 to decide on September’s production levels, according to the OPEC statement.
OPEC+ is an extension of the Organization of the Petroleum Exporting Countries (OPEC), comprising 13 member countries and including another 10 oil-producing countries that are not part of OPEC.
Founded in 1960, OPEC consists of countries that are major oil exporters, such as Saudi Arabia, Iran, Iraq, Kuwait, and Venezuela.
