Quick overview

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OPEC+ is facing uncertainty about its future strategies as global oil markets are experiencing an increasing surplus. However, the group plans to significantly boost production again in September to complete the reversal of its latest supply cuts to gain market share. During a recent video conference, Saudi Arabia and its allies agreed to increase production by 547,000 barrels per day for next month.

This decision marks the conclusion of a rapid reversal of a 2.2 million barrel cutback implemented by eight members in 2023. The United Arab Emirates is also gradually introducing an additional production allowance.

This increase represents a major shift for OPEC+ and its allies, moving from a focus on protecting oil prices to one of increasing output. Amid geopolitical unrest and strong seasonal demand, this policy shift has helped stabilize oil and gasoline futures, providing some relief for drivers and benefiting U.S. President Donald Trump. However, the market is nearing a significant oversupply due to the added barrels.

Three delegates indicated that OPEC+ will continue to explore options for an additional layer of halted output, which is currently set to expire at the end of 2026 and amounts to approximately 1.666 million barrels. They emphasized that the strength of market fundamentals will determine the group’s future actions, with one delegate suggesting a review later this year. A follow-up meeting is scheduled for September 7 among the eight countries.

A senior OPEC delegate remarked that the group’s unity in strategy is evident from the brief 16-minute call on Sunday. They added that the coalition remains capable of meeting at any time to halt supply increases or even reverse recent agreements.

According to the International Energy Agency in Paris, the fourth quarter is expected to see a surplus of 2 million barrels per day in global oil markets, driven by a decline in Chinese consumption and increased supplies from the U.S., Canada, Brazil, and Guyana. Wall Street forecasters, including JPMorgan Chase and Goldman Sachs, predict that by the end of the year, prices may drop to around $60 per barrel.