Will oil prices continue to fall? OPEC+ has decided to increase oil production for the third consecutive time, agreeing to raise oil production by 411,000 barrels per day in July.

OPEC+ has increased production significantly for the third consecutive time, which may further deepen the fall in oil prices. Hedge funds have aggressively shorted oil prices ahead of the meeting. According to media reports on Saturday, OPEC+ reached an agreement to increase oil production by 411,000 barrels per day for the third consecutive month, maintaining the same scale as the previous two production increases. While consensus was eventually reached on the increase in production for July, some member countries had reservations. Representatives stated that Russia was one of the member countries that suggested suspending production increases during Saturday's discussions. It is worth noting that OPEC+ had already increased production for two consecutive months. In April, the organization announced an increase of 411,000 barrels per day for May, triple the original plan, which directly pushed oil prices to a four-year low, briefly dropping below $60 per barrel. This was followed by maintaining the same production increase magnitude in June. Jorge Leon, an analyst at Rystad Energy A/S who previously worked at the OPEC Secretariat, stated: "OPEC+ is no longer low-key; May hinted, June was explicit, and July comes with a loudspeaker." Ahead of the resolution being announced, shorts in hedge funds were already gearing up. According to previous reports, asset management companies significantly increased short positions in Brent crude by 16,922 contracts to 130,019 contracts, reaching the highest level since October last year. At the same time, data from the U.S. CFTC showed that pure short positions in WTI crude also rose to a three-week high. Punishing overproduction, reclaiming market share OPEC+ has undergone a radical policy shift in the past two monthsfrom protecting prices to actively lowering them. This seemingly unusual strategy reflects Saudi Arabia's dual intent: punishing member countries such as Kazakhstan and Iraq for overproducing, while reclaiming market share from U.S. shale drillers and other competitors. On one hand, Kazakhstan has long exceeded its OPEC+ targets for production, consistently producing hundreds of thousands of barrels per day above quota, angering other member countries. Kazakhstan even issued a statement on Thursday stating that it would not cut production, sparking intense discussions within OPEC+ and market concerns about more significant production increases. On the other hand, analyses previously suggested that OPEC+ leaders Saudi Arabia and Russia are pursuing a second goalreclaiming market share occupied by U.S. shale oil. Lowering prices to below $60 per barrel is needed to substantially impact U.S. shale producers. This price level is just below the breakeven point of $61-70 per barrel for new drilling in U.S. shale oil, as indicated by a Dallas Fed survey. The current economic slowdown is impacting the U.S. shale oil heartland. According to previous reports, multiple U.S. oil companies are cutting spending and idling rigs, with industry giants warning that the decade-long boom in shale oil may be coming to an end. Additionally, analyses suggest that Saudi Arabia is trying to appease Trump by sacrificing short-term fiscal revenue to maintain their relationship by lowering oil prices. However, this strategy is not without cost. The Saudi Tadawul All Share Index has plummeted by 6.4% since May due to the impact of the sharp drop in oil prices, experiencing the longest four-month continuous decline since 2014, and the budget deficit in the first quarter has reached the highest level since the end of 2021. This article was originally published on "Wall Street View" by Zhao Ying; edited by Yan Wencai.