Oil prices are feared to come under pressure again! Crude oil traders expect OPEC+ to increase production for the fourth time this week.

date
01/07/2025
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GMT Eight
The oil trader expects OPEC+ to significantly increase oil supply for the fourth time.
Crude oil traders expect that the OPEC+ organization will reach its fourth large-scale agreement to increase oil production this weekend, as the leading country of the organization, Saudi Arabia, is still working to regain market share. According to representatives who attended a meeting last week, the eight main OPEC+ member countries are preparing to discuss a plan to increase production by 410,000 barrels per day, which will take effect in August. Based on a survey of 32 traders and analysts, they are likely to approve this measure at a video meeting on Sunday. Out of the 32 participants in the survey, 30 predicted that OPEC+ will approve a plan to increase daily production by 410,000 barrels on Sunday, continuing the similar scale of production increases reached in May, June, and July. The remaining two predicted smaller production increases or did not specify. Over the past three months, OPEC+ has quickly restored stagnant production at three times the original pace, despite signs of weak fuel demand and a clear global oversupply. This unexpected strategic adjustment has put tremendous pressure on oil prices. An Israel-Iran ceasefire agreement earlier eased concerns about the risks facing Middle East oil exports. Currently, Brent crude oil futures prices are close to $68 per barrel, down more than 9% since the beginning of the year. This decision by OPEC will determine the direction of oil prices in the coming months. If oil production continues to increase, it will exacerbate the global oil oversupply situation, further pushing down oil prices. While this trend can suppress inflation, it will significantly reduce the revenues of oil-producing countries. Representatives at the meeting pointed out the many reasons for the organization's strategic shift. These include meeting the growing demand, Saudi Arabia's efforts to constrain overproducing member countries, appease Trump, and regain market share. Earlier this month, sources revealed that Saudi Arabia wants to quickly restore idle oil production because the country is dissatisfied with giving up sales shares to American shale oil producers and other competitors. Jorge Leon, an analyst at research firm Rystad Energy, stated, "After the 12-day war, OPEC+ is expected to quickly move forward with the production cut plan. The organization has enough space to regain market share and keep oil prices above $60." Russia led a brief opposition to the previous unprecedented production increase, but now it seems to have softened its stance, indicating that it will accept another increase if its parliament reaches a consensus. OPEC+ has agreed to restore about two-thirds of the approximately 2.2 million barrel production cut implemented for 2023. A few more production increases will complete this process, at which point the organization will consider lifting further supply restrictions. However, actual production increases so far have been lower than the promised figures, partly because some member countries (such as Iraq and Russia) have foregone their allowed increases to offset previous overproduction. In May, the eight countries collectively increased production by 154,000 barrels, while the total amount that could have been increased was 410,000 barrels. Kazakhstan is one of the "violators" with the most severe violations, as the country still exceeds its production limits by millions of barrels each day, which has left Saudi Arabia feeling very frustrated. The country has limited capacity to control international companies' capacity expansion and has made almost no efforts to limit it. Further production increases by OPEC+ are expected to further pressure oil prices downward and increase the financial burden on member countries. JPMorgan Chase predicts that Brent crude oil futures prices will fall below $60 per barrel later this year and further decrease in 2026. However, given the weak signs of remediation from the violators of the organization, Saudi Arabia may decide to proceed with further punitive measures. Harry Tchilinguirian, head of research at Onyx Capital Group, said, "OPEC+ has taken a market share strategy. The secret is out, and they won't try to hide it again."