OPEC+ has decided to increase oil production significantly in August, marking a notable shift in their strategy to regain market share. This decision is especially welcome at a time of still-fragile global economic recovery. U.S. President Donald Trump is just one of the many stakeholders pushing the coalition to increase output in order to stabilize gasoline prices for consumers. In April, the coalition will release an extra 138,000 bpd. Then, starting in May, they will increase production by 411,000 bpd each month until they reach their planned level in July.
Since starting in April, OPEC+ has slowly and methodically rolled back their last set of production cuts – a total of 2.2 million bpd. By taking this increase, they will have cumulatively restored 1.918 million bpd since first cuts were instituted. That said, the coalition has 280,000 bpd remaining to release from the initial 2.2 million bpd cut. In total, OPEC+ holds additional cuts of 3.66 million bpd on the market to ensure balance.
The production boost will be contributed by eight member countries within OPEC+: Saudi Arabia, Russia, the United Arab Emirates (UAE), Kuwait, Oman, Iraq, Kazakhstan, and Algeria. Kazakhstan is high-fiving these days over recently celebrating an all-time high in output. This increase is largely a reflection of a booming rebound from its oil industry.
OPEC+ has joined with Russia to aggressively cut production since 2022 in response to booming, then crashing, and then booming again global oil prices and demand. Since OPEC+ produces about 40 percent of the world’s oil, its decisions have an outsize impact on the global energy market. The strategic pivot this year aims to reclaim lost market share while responding to external pressures and the evolving economic landscape.
OPEC+ is slated to meet again on August 3 to set further strategy and possibly production cuts. Our next few chats will address today’s debt market landscape. They’ll take a look at future projections so that we can be equitable in how we move ahead.