OPEC+ agrees to major supply hike as Trump eyes lower oil prices

OPEC and its allies are preparing to greenlight another major oil production increase for September, according to a Bloomberg report citing an OPEC+ delegate. The coalition, led by Saudi Arabia and Russia, is expected to ratify an output hike of 548,000 barrels per day in a video conference scheduled for Sunday. This would mark the final phase of reversing a 2.2 million barrel per day cut initiated by eight members of the group in 2023. It also includes additional allowances for the United Arab Emirates. The move reflects a dramatic pivot by the group from defending high oil prices to reclaiming market share, amid strong summer demand and geopolitical uncertainty.

OPEC+ accelerates reversal of 2023 cuts

As per Bloomberg, the production increase caps months of accelerated supply hikes by the alliance. In early April, OPEC+ shocked markets by announcing a rapid rollback of earlier output curbs, sending oil prices to a four-year low. That decision coincided with President Donald Trump’s surprise “Liberation Day” tariffs, which rattled global markets and put pressure on the group to stabilise prices.

Since then, OPEC+ has followed through with a series of bumper monthly increases, ramping up production further in July. Analysts suggest the group’s strategy is now geared more toward increasing global supply, rather than propping up prices.

Brent holds near $70 but surplus looms

Despite the sharp policy shift, crude prices have slowly recovered over the summer. Brent futures hovered just below $70 per barrel on Friday, still down 6.7 per cent for the year, according to Bloomberg data. However, market experts warn of a looming surplus later in 2025, as the production increases outpace demand growth.

Retail gasoline prices in the US have edged lower recently, offering some political relief for President Trump, who has long criticised OPEC+ for high prices and has repeatedly urged the Federal Reserve to cut interest rates. The current supply expansion aligns with Trump’s broader economic strategy, which seeks to ease inflationary pressures by reducing energy costs.

Ukraine war and Russian oil in spotlight

The decision also comes as the Trump administration considers new penalties on Russian oil exports. According to Bloomberg, Washington may impose secondary tariffs on buyers of Russian crude unless a ceasefire is reached in Ukraine. Any disruption to Russian oil flows could push prices higher, potentially clashing with Trump’s repeated calls for cheaper energy. Against this tense backdrop, Russia’s Deputy Prime Minister Alexander Novak made a rare visit to Riyadh on Thursday. He met with Saudi Energy Minister Prince Abdulaziz bin Salman to discuss bilateral cooperation, as reported by Bloomberg.

The two nations have jointly steered OPEC+ since its inception nearly a decade ago, and their coordination will be crucial as the group weighs further output adjustments. For now, global oil markets are bracing for a potential oversupply, even as geopolitical tensions simmer. The next decision facing OPEC+ may involve the 1.66 million barrels per day of output that remains offline until the end of 2026. Whether that volume returns earlier will depend on market dynamics and perhaps more importantly, the political calculations in Washington and Moscow.

(With inputs from the agencies)