A little slower: OPEC+ reduced the pace of production increase
At an online meeting on September 7, the ministers of the eight OPEC+ volunteer countries discussed the current situation on the oil market and decided to continue increasing production in October by 137 thousand barrels per day relative to September. Experts note that the cartel has reduced the growth rate of production by almost four times, which can be considered the only true thing, since in the current conditions the influence of OPEC + on the price environment is minimal, and the supply of oil from players outside the agreement is growing.
What have we agreed on
Eight OPEC+ countries — Russia, Saudi Arabia, the United Arab Emirates, Algeria, Iraq, Kazakhstan, Kuwait and Oman — have tentatively agreed to increase oil production in October by 137 thousand barrels per day from September levels. This is stated in the official message of the oil cartel.
According to the report, "taking into account the stable prospects for the global economy and the current favorable market indicators reflected in low oil reserves, the eight participating countries decided to adjust production by 137 thousand barrels per day from 1.65 million barrels per day of additional voluntary adjustments announced in April 2023."
The oil cartel stressed that "1.65 million barrels per day can be returned partially or completely, depending on changing market conditions and gradually."
"The countries will continue to closely monitor and evaluate market conditions, and in their ongoing efforts to maintain market stability, they have reaffirmed the importance of taking a precautionary approach and maintaining full flexibility to suspend or cancel additional voluntary production adjustments," the statement said.
Russian Deputy Prime Minister Alexander Novak, commenting on the decision of the OPEC+ member countries, said on the Rossiya 24 TV channel that Russia would increase production by 42,000 barrels per day.
"We are fulfilling our obligations in full. From the point of view of compensation and from the point of view of increasing the volumes that were accepted in previous periods. This allows us to ensure production growth for our oil industry. This has a positive impact on our economy and the oil industry as a whole. Therefore, we will continue to make all these decisions based on the need to maintain a balance of supply and demand in the global market," he said.
Saudi Arabia will also increase production by 42 thousand barrels. Iraq — by 17 thousand, the United Arab Emirates — by 12 thousand, Kuwait — by 11 thousand, Kazakhstan — by 6 thousand, Algeria — by 4 thousand, Oman — by 3 thousand barrels per day.
According to Dmitry Kasatkin, Managing partner of Kasatkin Consulting, the cartel expects an improvement in the overall economic situation at the global level, primarily in the Asian region.
— But in general, the decision looks like a consistent implementation of the strategy to increase OPEC's share in global oil markets. This is positive for Russia in terms of reducing the volumes that need to be compensated as part of over-fulfillment of previous quotas. It is important to note that OPEC remains flexible and during the next meetings, if the results of monitoring the supply/demand balance change, quotas can be adjusted. In general, the decision can be characterized as a very cautious adjustment in terms of what it means for Russia: +0.4% of daily production," Kasatkin says.
As noted in the cartel's message, the eight OPEC+ countries will hold monthly meetings to review market conditions, compliance and compensation. The next meeting of the eight countries will be held on October 5, 2025.
Why was this decision made?
OPEC+'s decision is quite predictable, says Valery Andrianov, associate professor at the Financial University under the Government of the Russian Federation.
— The Alliance is gradually increasing production, despite the rather unstable global market conditions. Moreover, such a decision looks almost the only correct one, since in the current conditions the influence of OPEC+ on the price environment is minimal, and the supply of oil from players outside the agreement is growing.
Ekaterina Kosareva, Managing Partner of VMT Consult, recalls that over the past 20 years, production in the United States has increased 3.5 times and the country has turned from the world's largest importer of fuel into a net exporter of oil and petroleum products.
"At the moment, the United States meets the demand in Europe for oil and petroleum products by more than a fifth," Kosareva says, noting that not all oil producers may like this state of affairs, especially when some are cutting production in order to maintain oil prices and future investments.
Therefore, according to Valery Andrianov, at this stage the main task is to gradually increase production at such a pace so that, on the one hand, it does not lead to a sharp collapse of the market, and on the other hand, to satisfy the appetites of the main members of the alliance and not allow third—party competitors to "take away" another market share from them.
— It is clear that there will be dissatisfied people. Countries with great opportunities and prospects for increasing production are in favor of a more active way out of restrictions, while countries without such opportunities are interested in maintaining relatively high prices," the source said.
Sergey Tereshin, CEO of Orep Oil Market, agrees with his colleague. He notes that the overall increase in quotas will not be very large: only 137 thousand barrels per day.
— This is the lowest increase in the last six months. Therefore, the latest decision will not lead to market destabilization," he believes.
Recall that at the penultimate meeting in August, eight OPEC+ countries voluntarily reducing oil production decided to increase production in September by 547 thousand barrels per day.
What will happen to oil prices
Oil prices began to play off insider information about the upcoming increase even before the weekend. If on Tuesday, amid skeptical investor sentiment about the peace talks between Russia and Ukraine, Brent was worth $69.14 per barrel, then at the close of trading on Friday, the price for the same volume of raw materials was already $65.50. This is evidenced by data from the London ICE exchange.
The reason for this was information disseminated by Western news agencies about the results of Sunday's meeting of the eight OPEC+ member countries.
Bloomberg, citing its sources, reported that Russia, Saudi Arabia, the United Arab Emirates, Algeria, Iraq, Kazakhstan, Kuwait and Oman had previously agreed to increase oil production in October by 137 thousand barrels per day from September levels. And one of the sources from Reuters claimed that the increase in production in October could amount to about 200-350 thousand barrels per day.
The market immediately reacted to this increase with a drop in quotations, and now industry experts do not expect significant fluctuations in oil prices.
According to Valery Andrianov, the market environment has recently reacted sluggishly to OPEC+ decisions, both due to the prevalence of other pricing factors and due to the absolute predictability of the alliance's actions.
— Prices may rise slightly in the short term as a reaction of trading robotic systems to external signals. But in the medium term, this impact is minimized, giving way to other, more significant factors, such as demand from major consumers and the level of geopolitical tension.
Ekaterina Kosareva added that threats of tougher sanctions against Russian oil or other friendly countries could deter further price falls.
By the end of the year, Brent prices will be below $70 per barrel, and next year they will drop to $60 per barrel, Sergey Tereshin believes.
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