The oil cartel is considering a massive production increase that could reshape global energy markets. This potential move represents three times the originally planned supply boost for July. Current market conditions suggest demand may not support such aggressive increases.
The 411,000 barrel daily hike has already triggered immediate market reactions. Oil prices dropped sharply following news of the potential decision. Key members will finalize this strategy during the upcoming June meetings.
OPEC+ may consider a much bigger increase in oil supply for July with a jump of 411,000 barrels per day being one of the main options. That's three times higher than what was planned earlier. The oil-producing group has already raised supply for May and June by the same amount. The July hike will be discussed in a video call among eight key members on June 1. All 22 members of the group will meet earlier on May 28 to look at production quotas for 2025 and 2026.
These increases mark a big change in the group's usual approach. For years OPEC+ cut output to support oil prices. But now the group seems more focused on increasing supply even if prices fall. OPEC+ has said the hikes are meant to meet demand but some officials have privately said the real reasons include punishing countries that are not following the rules and regaining lost market share. Saudi Arabia, the group's most powerful member, recently warned countries like Iraq and Kazakhstan that it could raise supply further if they do not stick to their quotas.
News of the possible hike has already affected prices. Brent crude fell 64 cents or 1% to US$64.27 a barrel by 0800 GMT on Thursday. US West Texas Intermediate dropped 59 cents or 1% to US$60.98. Prices also came under pressure from US data released on Wednesday. The Energy Information Administration said crude stocks rose by 1.3 million barrels to 443.2 million barrels in the week ended May 16. A Bloomberg survey of 32 oil traders and analysts found that 25 expect OPEC+ to approve the full 411,000 barrel-per-day hike.
The group is slowly reversing earlier supply cuts. Reuters has reported that OPEC+ may add back as much as 2.2 million barrels a day by November. Most forecasters expect oil demand growth to slow in the rest of 2025. Last week the International Energy Agency said weaker economic conditions would likely reduce oil demand after a strong first quarter. Goldman Sachs now expects OPEC+ to agree on the July hike but to avoid any further increases for now.