OPEC+ poised to accelerate oil output hike in August amid market volatility

OPEC+ is set to approve a faster-than-expected increase in oil production for August, with eight core members of the alliance preparing to raise output by as much as 550,000 barrels per day (bpd)—a sharp uptick from previous monthly hikes of 411,000 bpd. The decision, expected at a virtual meeting on July 5, reflects the group’s continued shift toward regaining market share despite the risk of oversupplying a fragile market. The group, which includes Saudi Arabia, Russia, the UAE, and Iraq, has been gradually reversing a 2.2 million bpd production cut it began unwinding in April. So far, 1.37 million bpd has been restored, and the planned August hike could complete the process by September, according to sources familiar with the talks.

Strategic shift amid supply glut risks

OPEC+, which pumps nearly half of the world’s oil, has been curtailing output since 2022 to support prices. But in recent months, the group has increased supply to recover sales volumes lost to rivals like US shale producers and to meet rising summer fuel demand. The decision comes even as oil inventories have been building globally, with analysts warning of a supply surplus later in the year. The International Energy Agency (IEA) and Wall Street firms like JPMorgan and Goldman Sachs forecast crude prices could dip below $60 per barrel by Q4.

President Donald Trump has also pressured the group to boost supply, aiming to curb gasoline prices and relieve inflationary pressure as he pushes the Federal Reserve to cut interest rates. The US, alongside producers in Canada, Brazil, and Guyana, has been increasing output, further intensifying the supply-demand imbalance.

Despite the push for more barrels, internal rifts persist within OPEC+. Saudi Arabia has demanded discipline from members like Kazakhstan and Iraq, who have consistently overproduced. The actual supply hitting markets has been lower than announced in previous months, partly due to Riyadh urging lagging countries to withhold their share to offset past breaches.

Russia, OPEC’s key ally, also faces pressure to boost revenue amid a deteriorating economy and sanctions fallout from its war in Ukraine. The recent meeting may also touch on September policy, depending on market dynamics and member compliance. As OPEC+ walks a tightrope between stabilising prices and expanding output, all eyes will be on whether the additional barrels cool or further complicate the already volatile oil market.