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OPEC+ Boosts Oil Production: A Big Surprise

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OPEC+ Boosts Oil Production: A Big Surprise


OPEC+ Boosts Oil Production: A Big Surprise

Major Players Increase Output by 548,000 Barrels Daily

Oil market

Saudi Arabia, Russia, and six other OPEC+ members have made a bold move. They will increase oil production by 548,000 barrels per day (bpd) in August. This is much more than experts predicted.

A Decision No One Saw Coming

Analysts thought the group would stick to a 411,000 bpd increase. This was the target for May, June, and July. But OPEC+ chose a bigger boost. They pointed to a stable global economy and strong market conditions. Low oil stocks also influenced their decision.

Market Reactions and Expert Views

Jorge Leon from Rystad Energy shared his thoughts on this surprise move. He said, “OPEC+ keeps surprising the market. This increase was larger than expected. It shows the group is focusing on market share.”

Leon also asked two important questions:

  • Will OPEC+ reverse the next level of cuts, totaling 1.66 million barrels, after ending the 2.2 million bpd voluntary cuts?
  • Will the market demand be enough to handle this extra supply?

Leon added, “With prices steady above $60 and a tense geopolitical scene, the answer to both could be ‘yes’.”

Giovanni Staunovo, a UBS analyst, gave his take. He said, “Kazakhstan and Iraq are still producing more than their new quotas. This supports the decision to end the cuts.”

The Geopolitical Background

This decision comes after a 12-day conflict between Iran and Israel. This conflict briefly pushed oil prices over $80 per barrel. Fears of a Strait of Hormuz closure, a key route for 20% of global oil, drove prices up.

OPEC+’s New Strategy

OPEC+, which includes OPEC’s 12 members and allies, had been cutting production since 2022 to support prices. But in a surprising shift, eight countries led by Saudi Arabia started increasing output in May. This caused oil prices to drop, settling between $65 and $70 per barrel.

A Bloomberg estimate suggested that despite doubling production targets, the group only increased output by 200,000 bpd in May. This new increase could be Saudi Arabia’s way of pressuring members who haven’t stuck to their quotas. It could also reduce their oil profits.


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