Increase of 547,000 Barrels per Day Starting in September
Potential for Weaker Performance Among Global Energy Companies
OPEC+, a coalition of major oil-producing countries including the Organization of the Petroleum Exporting Countries (OPEC) and Russia, has effectively ended its production cut strategy that lasted for nearly two years by deciding to increase output by an additional 547,000 barrels per day starting in September. The market is now concerned that this could lead to an oversupply in the second half of the year, potentially resulting in a decline in oil prices, deteriorating performance for global energy companies, and a slowdown in inflation.
According to the Financial Times (FT) on August 3 (local time), OPEC+ has decided to increase production by an additional 547,000 barrels per day from September. OPEC+ is a consortium of eight countries, including Saudi Arabia, Russia, and the United Arab Emirates (UAE), supplying about half of the world's crude oil. FT pointed out that this decision marks the end of the production cut agreement that began in January 2024. OPEC+ had been voluntarily cutting production by 2.2 million barrels per day in response to the spread of electric vehicles and weakening oil demand from China.
The production cuts, initially intended to last only three months, failed to prevent the decline in international oil prices. Furthermore, as production in the United States, Brazil, and Canada increased, OPEC+'s market share shrank, leading to conflicts of interest among member countries, including demands for increased production and non-compliance with production quotas. As this situation persisted, OPEC+ signaled in December last year that it planned to gradually withdraw production cuts starting in March this year. During this process, the UAE was allowed to increase production by an additional 300,000 barrels per day.
So far, the market has absorbed OPEC+'s additional supply, supported by increased travel demand during the summer holiday season. On the ICE Futures Exchange, the price of near-month Brent crude futures plunged 19% between April and May, falling below $60 per barrel, but later rebounded to reach $69.22 per barrel on August 3. Concerns over sudden supply disruptions due to the Israel-Iran war and expectations for successive trade agreements by the United States were cited as reasons for the sharp rise in Brent prices. The price of West Texas Intermediate (WTI) crude for August delivery fell 0.58% on August 3, closing at $66.94 per barrel. This is interpreted as the market having already priced in the prospect of increased production by OPEC+.
The market is now focusing on the possibility of an oversupply in the second half of 2025 as a result of this measure. In particular, a significant imbalance in oil supply and demand is expected to materialize this winter. The International Energy Agency (IEA) has predicted that supply will outpace demand, causing oil prices to decline next year. Reuters reported that analysts expect oil prices to be around $63 per barrel in the second quarter of 2026, identifying tariff risks and weakening demand as major factors behind the expected decline in prices.
There are also observations that OPEC+'s expanded supply could, in the long term, lower oil prices, which may in turn lead to weaker performance for global energy companies and a slowdown in inflation. In fact, ExxonMobil's second-quarter profit fell to its lowest level in four years, which was attributed to the sharp drop in oil prices as OPEC+ increased production.
Non-OPEC oil-producing countries are expected to slow production in the future. This is because, between 2026 and 2027, the incentive to increase output?especially in the United States?may diminish due to falling prices. Energy consulting firm Rystad has forecast that the daily crude oil production growth among non-OPEC countries will plummet from about 1.4 million barrels in 2025 to just about 91,000 barrels in 2027.
Some experts suggest that these supply adjustments could leave room for oil prices to rebound in 2026 and 2027. The FT analyzed, "If the pace of supply growth continues to slow, non-OPEC oil-producing countries may have less capacity to expand production," and added, "This could ultimately lead to a resurgence in oil prices."
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