OPEC+ Set to Boost Oil Production Amidst Market Shifts

Saudi Arabia and Russia Lead the Charge as Production Increases Are Planned for August

The world’s largest oil producers, led by Russia and Saudi Arabia, are poised to significantly increase oil output in August. This move, if approved, could inject millions of barrels into the global market, impacting prices and potentially reshaping supply dynamics.

Production Surge Planned

The OPEC+ group intends to raise output by 411,000 barrels per day (BPD) in August. According to sources, this increase would bring the total OPEC+ offer in 2025 to 1.78 million BPD, equivalent to over 1.5% of global demand. However, some member nations have struggled to fully implement previous agreed-upon increases.

“The group is expecting an increase in global oil demand during the summer,”

—Vladimir Putin, Russian President

The anticipated production boost occurs amidst a changing global oil market. A recent report indicated that global oil consumption is expected to rise by 2.2 million barrels per day in 2024, driven by demand from Asia and other emerging markets (IEA April 2024 Report).

Strategic Shift and Market Dynamics

OPEC+ has radically altered its strategy recently after years of cumulative production cuts. Since April, several members have begun easing the last 2.2 million BPD of reductions, accelerating increases. This shift seeks to recapture market share lost while rivals, such as the U.S., increased production.

Internal tensions influenced this pivot, including Kazakhstan exceeding production targets, causing friction among members. The group will meet on July 6; analysts estimate the August decision will be approved.

A factor to consider is the potential return of Iranian exports, as the group considers these production adjustments. Oil prices experienced volatility, reaching a five-month high of over $81 per barrel on June 23. Ultimately, the OPEC+ members have implemented cumulative increases of 1.37 million BPD so far.