Third straight monthly hike adds pressure to oil prices and global producers
OPEC+ has agreed to boost oil production by a further 411,000 barrels per day (bpd) in July, marking the third consecutive monthly hike as the cartel continues to unwind voluntary cuts and shift focus from price support to market share recovery.
The move, confirmed after an online meeting of the alliance on Saturday, extends a series of increases that began in April. In total, the eight participating countries—Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman—have now restored 1.37 million bpd of the 2.2 million bpd they had voluntarily taken offline, representing about 62% of their planned return.
OPEC+ cited a “steady global economic outlook and current healthy market fundamentals” as justification for the latest increase, with several members emphasising that summer demand should help absorb the additional supply. Analysts at UBS noted that the market remains tight, and some of the eight countries are still overproducing, which could mute the effective rise.
Yet the decision comes as oil prices remain under pressure. Brent crude closed at US$63.93 on Friday, down 0.34%, while West Texas Intermediate settled at US$60.73. Both benchmarks remain well below the levels seen earlier in the year, with prices falling to a four-year low in April amid concerns about oversupply and global economic fragility—fuelled in part by renewed US tariffs under President Donald Trump.
Strategic shift
OPEC+’s move is seen as a direct effort by leaders Saudi Arabia and Russia to discipline quota violators like Iraq and Kazakhstan while undercutting rival producers, particularly in the US shale sector. “If price will not get you the revenues you want, they are hoping that volume will,” said Harry Tchilinguirian of Onyx Capital Group.
Kazakhstan alone exceeded its March target by over 400,000 bpd, frustrating Saudi Arabia. By ramping up supply, the group appears to be signalling that non-compliance will come at a cost, even if that means accepting lower oil prices.
The decision also aligns, to some extent, with US interests. Trump has long called for lower oil prices and is preparing for a visit to Riyadh, where the increased output could be viewed as a goodwill gesture.
Demand vs surplus
OPEC+’s confidence in the market’s ability to absorb more oil is not universally shared. The International Energy Agency expects global oil demand to grow by just 740,000 bpd this year, down from 990,000 bpd in the first quarter, amid macroeconomic headwinds and surging electric vehicle sales in China.
At the same time, global supply is projected to rise by 1.6 million bpd in 2025, creating a forecast surplus of around 730,000 bpd—enough to push prices lower if demand disappoints.
Major banks have already adjusted their outlooks. Goldman Sachs cut its Brent forecast to US$66 and WTI to US$62, while Standard Chartered slashed its Brent estimate to US$61, citing OPEC+ supply and economic risks. JPMorgan now sees a 60% chance of recession, which could further weaken demand.
Long-term implications
Beyond July, OPEC+ has signalled flexibility. While the group plans to continue unwinding cuts through 2025, it has left the door open to reversing course if needed. A full ministerial meeting is scheduled for May 2026 to reassess.
In the longer term, the cartel’s influence may face structural challenges. The US, Brazil, Canada and Guyana are all expected to drive non-OPEC+ supply growth, reducing the alliance’s share of global output from 47% in 2024 to 46% in 2025. Meanwhile, energy transition trends—particularly electric vehicle adoption—are likely to cap future demand growth. The IEA expects global oil demand to peak near 106 million bpd by the end of the decade.
