LONDON: Saudi Arabia, Russia, and six other OPEC+ members are expected to approve another oil production increase during their meeting on Sunday. Analysts suggest the move aims to reclaim market share as crude prices stay strong despite recent output hikes.
The group, known as the “Voluntary Eight” (V8), may raise production by 548,000 barrels per day (bpd) for September, mirroring August’s target. This follows a series of increases since April, marking a shift from previous policies focused on cutting output to stabilize prices.
UBS analyst Giovanni Staunovo noted that the expected quota rise is “largely priced in,“ with Brent crude likely holding near $70 per barrel post-decision. The V8’s strategy now prioritizes market share over price stability, reversing years of production cuts.
However, ING analyst Warren Patterson predicts a pause in supply hikes after September. Despite rising quotas, actual production growth has been slower, partly due to strong summer demand and geopolitical risks, including tensions from the Iran-Israel conflict.
Staunovo cited OPEC data showing lower-than-expected output growth between March and June. Patterson warned of a potential oil surplus from October, urging OPEC+ to avoid worsening the imbalance.
PVM analyst Tamas Varga highlighted the group’s challenge: “OPEC+ is doing the balancing act of regaining market share and not sending oil prices plummeting.” Saudi Arabia, heavily reliant on oil revenue, faces pressure as it pursues economic diversification.
Geopolitical uncertainties, including U.S. trade policies and potential sanctions on Russia, add volatility. President Donald Trump’s recent threats to impose tariffs on Russian oil buyers, like India, could further disrupt markets.
Staunovo emphasized OPEC+ would only react to actual supply disruptions, not speculative price hikes. The group’s next ministerial meeting in November will discuss unwinding additional cuts of 3.7 million bpd. - AFP
