Background on OPEC+ and its Role in Global Oil Markets
OPEC+, which includes the Organization of the Petroleum Exporting Countries (OPEC) along with Russia and other allies, plays a crucial role in shaping global oil production levels. This group accounts for nearly half of the world’s crude oil production, making its decisions significantly impact global energy markets.
OPEC+ Strategy Shift
Since April, OPEC+ has shifted its strategy from production cuts to increases. The group has already raised quotas by approximately 2.5 million barrels per day (bpd), roughly 2.4% of global demand, to boost market share under pressure from U.S. President Donald Trump to lower oil prices.
Limited Impact on Oil Prices
Despite these increases, oil prices have remained near $66 per barrel, supported by Western sanctions on Russia and Iran. This has encouraged production increases from rivals like the United States, diminishing the effectiveness of OPEC+’s efforts.
Upcoming Production Increase
According to sources within OPEC+, the group is expected to announce another production increase on Sunday. However, this increment will be smaller than previous months due to concerns over a potentially slowing global oil demand.
Negotiations and Agreed Upcoming Increase
Two sources indicate that discussions revolve around gradually reversing the entire cut in monthly increments. The group has reportedly reached a preliminary agreement to raise production by at least 135,000 bpd starting in October.
A third source from OPEC+ suggests that the October increase could range between 200,000 and 350,000 bpd.
Previous Production Adjustments
In August, OPEC+ raised production by 547,000 bpd for September. The current situation, however, shows that most members are already operating close to their production capacities.
Ongoing Production Cuts
Despite the planned production increases, OPEC+ still maintains two levels of production cuts: 1.65 million bpd from eight members and another 2 million bpd for the entire group until the end of 2026.
Key Questions and Answers
- What is OPEC+ and why is it important? OPEC+ is a group consisting of the Organization of the Petroleum Exporting Countries (OPEC), Russia, and other allies. It controls nearly half of the world’s crude oil production, making its decisions vital for global energy markets.
- Why is OPEC+ shifting its strategy from cuts to increases? The shift aims to boost market share under pressure from U.S. President Donald Trump to lower oil prices.
- Why haven’t OPEC+ increases significantly affected oil prices? Oil prices have remained near $66 per barrel, supported by Western sanctions on Russia and Iran, which has encouraged production increases from rivals like the United States.
- What is the expected size of the upcoming OPEC+ production increase? Sources suggest an increase ranging from 200,000 to 350,000 bpd starting in October.
- Why is OPEC+ reversing production cuts gradually? This strategy aims to address concerns over a potentially slowing global oil demand.
- What are the ongoing production cuts maintained by OPEC+? OPEC+ still maintains two levels of production cuts: 1.65 million bpd from eight members and another 2 million bpd for the entire group until the end of 2026.
