OPEC+ decides to increase its oil production

Accentuating their strategy to regain market share launched in April, Riyadh, Moscow and six other OPEC+ oil producers decided to further increase their quotas during an online meeting on Sunday, surprising the market.

The eight energy ministers want to increase production by 137,000 barrels per day by October 2025 compared to the production level required in September, a statement explained.

The Organization of the Petroleum Exporting Countries and its allies (OPEC+), which have long fought against price erosion by planning to reduce supply through several production cuts, have made a shift since last April, rapidly increasing their quotas.

Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Oman and Algeria, which have already increased their production by 2.2 million barrels per day in recent months, are now entering a new cycle that could see up to 1.65 million barrels per day return to the market.

"The 1.65 million barrels per day could be restored in part or in full, and in a progressive manner, depending on the evolution of market conditions," reads the group's press release, which does not give a specific deadline.

OPEC+ faces competition, notably from the United States, whose President, Donald Trump, has promised to "drill like crazy," but also from other countries that are increasing their production, such as Canada, Guyana, and Brazil.

With demand for black gold traditionally falling in the fourth quarter, analysts were almost unanimous a week ago in saying that OPEC+ was heading towards a status quo in October to avoid a price collapse in a flooded oil market.

"In reality, the increase in production will be much less given OPEC+'s production limits and compensation mechanism," Jorge Leon, an analyst at Rystad Energy, told AFP.

Some countries that have exceeded their quotas in the past must compensate for these increases by producing less in the coming months.

But "the message is strong," the analyst believes, and it risks causing oil prices to fall below $60.

The price of Brent crude, the global benchmark, was just above $65 a barrel at the close of trading on Friday, far from the $120 highs reached in spring 2022 following the Russian invasion of Ukraine.

So far, oil prices have held up better than observers anticipated when the floodgates first reopened in April, particularly due to geopolitical risks.

Experts are keeping their eyes fixed on the war in Ukraine and the evolution of relations between Washington and Moscow.

Russia's oil wealth has become a prime target for Donald Trump to push the Kremlin into negotiations.

And the OPEC+ decision raises questions about the group's unity, according to Jorge Leon: "Russia depends on high prices to finance its war machine" and could find it difficult to benefit from higher quotas due to American and European pressure on its oil sector.

In August, the US president imposed additional tariffs on the import of Indian products into the United States to punish New Delhi for importing Russian black gold.

In a conversation with Ukrainian allied leaders gathered in Paris, Donald Trump also said that "Europe must stop buying Russian oil," a senior White House official told AFP, referring to imports from Hungary and Slovakia that continue via a pipeline connected to Russia.

He also asked Europeans to "put economic pressure on China because of its support for the Russian war effort," as Beijing is the largest importer of Russian oil.