OPEC+ countries agreed to increase oil production again — this time by 411 thousand barrels per day in July, despite Russia's objections, writes Bloomberg. This is already the third such decision in a row: similar increases were approved for May and June.
The April announcement of production growth already caused prices to plummet — a barrel of oil then fell below $60, the lowest in four years. Currently, Brent oil futures are trading around $64, but to cover Saudi Arabia's government expenses, according to the IMF, a level above $90 is necessary.
The increase in supplies indicates Saudi Arabia's desire to punish cartel members exceeding quotas — Kazakhstan and Iraq, as well as to push American shale oil out of the market. Moreover, this decision aligns with Donald Trump's policy, who advocates for lower fuel prices, the agency believes.
However, several member countries expressed doubts during Saturday's meeting about the need to increase production at an accelerated pace, such as Russia, Algeria, and Oman.
OPEC+ began increasing oil production volumes in April. This involves returning 2.2 million barrels per day to the market, which cartel participants voluntarily cut in 2023. Initially, it was planned that the production increase would proceed at a slower pace and all 2.2 million barrels would return to the market only by the end of 2026.
With the planned July production increase, OPEC+ is already halfway to fulfilling the roadmap for returning 2.2 million barrels per day to the market, writes Bloomberg.
The quota increase is highly likely to lead to a further decline in oil prices. Since the beginning of April, Brent oil has fallen from $75 per barrel to about $63 at the end of this week. Russian Urals oil dropped to just over $50 per barrel.