OPEC+’s production strategy has seen a notable shift, marked by increased output and a focus on market share . This shift began to take shape in April 2025, with subsequent increases in May, June, and July .
Here’s a breakdown of the key elements and factors driving this change:
- Increased Production Targets: OPEC+ agreed to increase oil production by 411,000 barrels per day (bpd) for July, mirroring the increases in May and June . This decision signifies a move away from previous policies of curbing output to maintain higher prices .
- Market Share Focus: A primary driver behind the increased production is the pursuit of market share, particularly by Saudi Arabia and Russia . This strategy aims to win back market share and potentially put pressure on over-producing members and U.S. shale producers .
- Response to Overproduction: The change in strategy is partly a response to some member countries, like Kazakhstan and Iraq, exceeding their output quotas . By increasing overall production, Saudi Arabia aims to discourage overproduction and ensure compliance within the group .
- Impact on Oil Prices: The increased supply has contributed to a drop in crude oil prices . While this benefits consumers, it puts pressure on the revenues of oil-exporting nations and U.S. shale producers .
- Global Demand Considerations: OPEC+ has cited a “steady global economic outlook and current healthy market fundamentals, as reflected in the low oil inventories” as a reason for the July increase . Higher summer oil demand also favors increased output . Global oil demand is expected to grow by an average of 775,000 bpd in 2025 .
- Internal Disagreements: Despite the consensus on increasing output, there have been internal disagreements within OPEC+. Russia reportedly proposed pausing the increases but was overruled . Algeria was among the nations that requested a pause in output hikes .
- Long-Term Strategy: Under formal policy, the entire OPEC+ group is cutting roughly 2 million barrels per day until the end of 2026 . Besides the 2.2 million bpd cut that the eight members started to unwind in April, OPEC+ has two other layers of cuts that are expected to remain in place until the end of 2026 .
In summary, OPEC+’s shift in production strategy reflects a move towards increasing output to gain market share and manage internal compliance, despite potential impacts on oil prices and differing opinions among member states . for editorial page & world news click www.eminentnews.com
