OPEC+ Nations to Increase Oil Production come September
OPEC+ Announces Increase in Oil Production Starting September 2025
In a move aimed at reclaiming global market share, eight OPEC+ countries have decided to increase oil production by approximately 547,000 to 548,000 barrels per day starting in September 2025. This decision fully reverses the 2.2 million-barrel-a-day cuts implemented in 2023.
The decision was made during a virtual meeting of the producers on August 3, and the OPEC press service announced the news. The countries involved in the increase are Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman.
The increase in oil production is part of OPEC's efforts to adjust to market conditions. The organization has reaffirmed its commitment to the Declaration of Cooperation. The decision reflects low global oil inventories and steady demand outlooks, as well as a desire to prevent a supply shortage and cushion markets considering geopolitical risks and rising seasonal demand.
The OPEC+ countries have not announced any changes to their previously agreed-upon monthly increments. However, the phase-out of additional voluntary production adjustments may be paused or reversed subject to evolving market conditions.
The decision marks a continued step in phasing out the group's voluntary production cuts. The agreement reflects a strategic pivot away from price support towards market share defense by OPEC+.
The increase in oil production could provide some relief for drivers and consumers by potentially reducing gasoline prices. However, it could swell global oil supply later in the year, possibly causing a surplus and impacting prices negatively over time.
The producers have pledged to accelerate compensation for any overproduction from January 2024. The decision to adjust oil production is contingent on evolving market conditions for the purpose of supporting oil market stability. The agreement to adjust oil production was reached on Dec. 5, 2024, and the Joint Ministerial Monitoring Committee (JMMC) will continue to monitor the adjustments.
The future of oil production adjustments will depend on ongoing market and political developments. OPEC+ may pause further production hikes after this tranche to assess evolving market and macroeconomic conditions. The next delayed output tranche of 1.66 million barrels per day is scheduled to remain offline until at least the end of 2026, but its future release depends on market dynamics. Possible production cuts or adjustments could be revisited if demand weakens or surplus increases beyond expectations.
Saudi Arabia showed some flexibility in July 2025 by briefly reducing output after an earlier increase, indicating a willingness to fine-tune production as needed. The decision to increase oil production was also influenced by pressure from the United States, including political aims to influence Russian oil trade and geopolitical negotiations.
The decision to increase oil production comes despite warnings about a future supply glut and ongoing geopolitical tensions such as the Russia-Ukraine conflict. The move raises ESG investment concerns, as it conflicts with International Energy Agency warnings about long-term supply surpluses threatening climate goals and decarbonization efforts.
References: 1. Bloomberg 2. Reuters 3. Wall Street Journal 4. Financial Times 5. CNBC
The increase in oil production by OPEC+ countries will likely impact the energy industry's finance sector, as higher output could influence oil prices and potentially affect energy companies' profits. Given the decision to reverse previous oil production cuts, the oil-and-gas sector may experience fluctuations and need to adapt to changing market conditions. The OPEC+ countries' strategic pivot towards market share defense is anticipated to have far-reaching implications for the industry, as the ongoing adjustments could affect investment in renewable energy sources.
