OPEC+ plans to increase oil production in an attempt to earn a market share

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OPEC+ will increase production again next month, as the Saudi -led oil cartel seeks to increase the market share in a move that is likely to put down pressure on crude prices.

Eight members of the producers group, including the Kingdom of Saudi Arabia, the United Arab Emirates and Russia, said on Saturday that they would do major production in August by 548,000 barrels per day, with an increase in a planned increase in July from 411,000 barrels/d.

This step speeds up the imposition of long production discounts. OPEC+ had stopped the offer since 2022 in an attempt to support prices, but reflected its policy in April.

The initial plan of the group of main production will increase by 2.2 million barrels/D for 18 months, but since May, the show was accelerated. It is now possible to regain all covered production by the end of September, a year before the original schedule.

“OPEC+ is surprising the market,” said Jorge Lyon, a former OPEC employee now in Rystad Energy Consulting. “This sends a clear message, to anyone who is still in doubt, that the group is firmly turning towards a market share strategy.”

Analysts said that one of the reasons for tracking rapid production is that the demand for oil is generally stronger during the summer of the northern hemisphere, due to the high activity of the refinery and the summer leadership season in the United States and Europe.

In the long run, the increase in production is threatened in addition to what most merchants expect to be a major surplus of supply by the end of the year, which may drive prices to less than $ 60 a barrel.

Brent crude, the global standard, was $ 68 a barrel at the end of trading on Friday.

OPEC+ members and people familiar with the group’s thinking presented a set of interpretations of the group’s commitment to restore the kidnapping supply, although the negative impact on prices. Most of them agree that the rapid relaxation was largely driven by Saudi Energy Minister Abdulaziz bin Salman, who believed that the burden of discounts was not equally shared.

The Kingdom of Saudi Arabia was attending the largest share of discounts while the OPEC+ members were constantly producing over their shares, reducing the total effect of the effort. By April, the Kingdom of Saudi Arabia has reduced its production by five years over the past three years to about 9 milliliters/d, which is the lowest level since 2011 except for the Corunaf virus.

The Kingdom of Saudi Arabia has sought to restore discipline by agreeing on new plans to compensate for excessive production, but it seems that some OPEC members, especially Kazakhstan, have ignored these directives and continued to pump oil to exceed their shares.

Analysts said that since the cuts no longer support prices, supply supplies are no longer logical for the Kingdom of Saudi Arabia and other major producers such as the United Arab Emirates.

In a dual victory for the carmal, allowing the rise and prices to a decrease has also helped to prefer curry with US President Donald Trump, who has repeatedly called for cheaper oil, while American rock producers, which generally needs higher prices to break it.

Layion Leon said that the following question of the oil market is whether the group will move to relax on a second group of voluntary cuts, which represents 1.65 million barrels/D of the wrong capacity, which is scheduled to remain in place until the end of 2026.

“Two big questions are now hanging on the market,” he said. “Will OPEC+ target the next layer (of discounts). Is there a sufficient demand to absorb it?”