OPEC+, a group of major oil-producing nations, has announced plans to increase oil production by 411,000 barrels per day (bpd) starting in July. The decision was made on Saturday by eight member countries, including Saudi Arabia, Russia, Iraq, and the United Arab Emirates, as part of a strategy to regain market share and ensure compliance among members.
This move follows the group’s earlier plan to gradually reverse previously agreed cuts. Since April, OPEC+ has been steadily ramping up production, with the latest increase marking the third consecutive monthly hike. In total, production has increased by 1.37 million bpd since April, accounting for 62% of their planned return to pre-cut levels.
In a statement, OPEC+ cited a “steady global economic outlook and healthy market fundamentals,” including low oil inventories, as reasons for the production boost. However, some analysts warn that increasing supply could put downward pressure on oil prices, which have recently seen significant fluctuations.
“Today’s decision shows that market share is a top priority,” said Harry Tchilinguirian, an analyst at Onyx Capital Group. “If higher prices aren’t delivering the expected revenues, they’re hoping that higher volumes will.”
OPEC+ nations pump about half of the world’s oil, and their actions have a significant impact on global energy markets. The increased supply may affect oil prices worldwide, potentially squeezing all producers—but some more than others. In particular, U.S. shale producers could feel the pressure, as their production costs have risen over the past three years.
According to a survey by the Dallas Federal Reserve, U.S. shale producers now need oil prices to be around $65 per barrel on average to profitably drill. Declining global oil prices, influenced in part by economic shifts and global policies, have affected their revenues.
The oil market plays a crucial role in the global economy, impacting everything from transportation costs to the price of goods. The decisions made by OPEC+ nations can influence energy affordability, especially in developing regions across the Global South, where many young people are keenly affected by economic changes.
