OPEC+ agreed on Sunday to raise oil production by 547,000 barrels a day for September, the latest in a series of accelerated output hikes to regain market share, as concerns mount over potential supply disruptions linked to Russia.
The move marks a full and early reversal of OPEC+’s largest tranche of output cuts plus a separate increase in output for the United Arab Emirates amounting to about 2.5 million b/d, or about 2.4 per cent of world demand.
Eight OPEC+ members held a brief virtual meeting, amid increasing U.S. pressure on India to halt Russian oil purchases – part of Washington’s efforts to bring Moscow to the negotiating table for a peace deal with Ukraine. President Donald Trump said he wants this by Friday.
In a statement following the meeting, OPEC+ cited a healthy economy and low stocks as reasons behind its decision.
Oil prices have remained elevated even as OPEC+ has raised output, with Brent crude closing near US$70 a barrel on Friday, up from a 2025 low of near US$58 in April, supported in part by rising seasonal demand.
Imperial Oil encouraged by talks with Ottawa as company posts fall in quarterly profit
“Given fairly strong oil prices at around $70, it does give OPEC+ some confidence about market fundamentals,” said Amrita Sen, co-founder of Energy Aspects, adding that the market structure was also indicating tight stocks.
The eight countries are scheduled to meet again on Sept. 7, when they may consider reinstating another layer of output cuts totalling around 1.65 million b/d, two OPEC+ sources said following Sunday’s meeting. Those cuts are currently in place until the end of next year.
OPEC+ in full includes 10 non-OPEC oil producing countries, most notably Russia and Kazakhstan.
The group, which pumps about half of the world’s oil, had been curtailing production for several years to support oil prices. It reversed course this year in a bid to regain market share, spurred in part by calls from Mr. Trump for OPEC to ramp up production.
The eight began raising output in April with a modest hike of 138,000 b/d, followed by larger-than-planned hikes of 411,000 b/d in May, June and July, 548,000 b/d in August and now 547,000 b/d for September.
“So far the market has been able to absorb very well those additional barrels also due to stockpiliing activity in China,” said Giovanni Staunovo of UBS. “All eyes will now shift on the Trump decision on Russia this Friday.”
As well as the voluntary cut of about 1.65 million b/d from the eight members, OPEC+ still has a 2-million-b/d cut across all members, which also expires at the end of 2026.
“OPEC+ has passed the first test,” said Jorge Leon of Rystad Energy and a former OPEC official, as it has fully reversed its largest cut without crashing prices.
“But the next task will be even harder: deciding if and when to unwind the remaining 1.66 million barrels, all while navigating geopolitical tension and preserving cohesion.”
Leave a Reply
You must be logged in to post a comment.