Oil Prices to Drop Further as OPEC+ Announces Large Output Hike

OPEC+, a group of eight oil-producing countries led by Saudi Arabia and Russia, on Saturday announced plans to hike their production output by 548,000 barrels per day in August 2025, in what they called their "commitment to market stability" and a "steady global economic outlook."

The move aims to return their total oil output to 2.2 million barrels per day (bpd), which they had cut back in 2023. In April this year, OPEC+ had announced the gradual return to production at this level.

The eight OPEC+ countries comprise Saudi Arabia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, Oman, and Russia. The group had earlier announced increases of 411,000 barrels of production for each of May, June, and July, and traders had expected the same amount for August, according to Bloomberg.

On July 5, the group said future hikes may be paused or reversed depending on market conditions. They also pledged to fully compensate for any overproduction since January 2024 and will continue monthly meetings, with the next set for August 3 to review September output.

Move to Increase OPEC+ Market Share

According to analysts, OPEC+'s decision is aimed at increasing its market share in the world crude oil supply, as American countries have increased their output. They note that the move would flood the already oversupplied market with more inventory and lead to further pressure on already falling oil prices.

The Organization of the Petroleum Exporting Countries and its partners have significantly shifted their strategy in 2025, moving away from years of production restraint to increasing output. Since April, the group has gradually opened the taps, contributing to a growing global surplus. Oil inventories have been rising by about 1 million barrels per day, as demand weakens—particularly in China—and supply grows from the US, Canada, Brazil, and Guyana, according to the news agency.

Brent crude futures have dropped 8.5% this year, with further declines expected. The International Energy Agency warns of a substantial surplus in the second half of 2025. JPMorgan and Goldman Sachs predict prices could fall to $60 a barrel or below by the fourth quarter.

As per Oilprice.com at 11:35 am IST on July 6, Brent Crude (August contract) was trading at $68.30, down 0.73%.

Although prices briefly spiked during last month’s Iran-Israel conflict, they quickly fell back as oil supplies remained unaffected.