OPEC’s surprise announcement of a 30% increase in oil production. Beginning in September, eight of its member countries will start to increase production by 547,000 barrels per day. Representatives from Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman spoke virtually on Sunday. Instead, they all agreed to terminate their voluntary production cuts early.
The eight countries, which joined OPEC+ in late 2023, began engaging in non-binding voluntary production reductions beginning in November. These cuts were originally scheduled to last through September 2026. That’s why the recent announcement comes as a sign of a change in strategy as these countries race to boost production sooner than anticipated. OPEC is scheduled to meet on September 7 to discuss production and the state of the market.
Today, the price of Brent crude oil has hovered around $70 per barrel. Analysts suggest that this price point could be influenced by two key factors: a potential loss of Russian oil on the market and a substantial rise in crude inventories in China. Clearview Energy Partners, a research outfit, provided excellent context on the current situation. They raised the alarming prospect of “secondary tariffs” being placed on American buyers amid a continuing, worsened geopolitical landscape.
“President Trump has not obviously relented from his threat to sanction Russian energy if the Kremlin does not reach a peace deal with Ukraine as of August 7, potentially via ‘secondary tariffs’ on buyers.” – Clearview Energy Partners
The increase in production may reflect OPEC’s response to changing market dynamics and the need to stabilize prices amid fluctuating global demand. The projected boost in supply comes at a key time for the global oil market. States have made vastly different decisions producing a tap dance of conflicting sanctions and unilateral moves leading to an unusual energy landscape.
