On September 7, ministers from eight volunteering OPEC+ nations held an online meeting to discuss the current oil market situation and agreed to continue increasing production by 137,000 barrels per day in October compared to September. Experts note that the cartel has reduced the pace of production growth by nearly four times, a decision that is deemed appropriate given that OPEC+'s influence on price dynamics is minimal in the current environment, while oil supply from non-member players is on the rise.
What Was Agreed Upon
The eight OPEC+ countries—Russia, Saudi Arabia, the UAE, Algeria, Iraq, Kazakhstan, Kuwait, and Oman—reached a preliminary agreement to increase oil production by 137,000 barrels per day in October from September levels. This is stated in the official announcement from the oil cartel.
According to the statement, "considering the stable prospects of the global economy and the current favorable market indicators, reflected in low oil stocks, the eight participating countries decided to adjust production by 137,000 barrels per day from the additional voluntary adjustments of 1.65 million barrels per day announced in April 2023."
The oil cartel emphasized that the "1.65 million barrels per day can be partially or fully reinstated 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 confirmed the importance of exercising caution and maintaining full flexibility to suspend or cancel additional voluntary production adjustments," the statement noted.
Russian Deputy Prime Minister Alexander Novak, commenting on the decision of OPEC+ member states during a broadcast on Russia 24, noted that Russia will increase its production by 42,000 barrels per day.
"We are fulfilling our obligations in full. This means compensating and increasing volumes that were set in previous periods. This allows us to ensure growth in our oil sector. It has a positive impact on our economy and the oil industry as a whole. Therefore, we will continue to make these decisions based on the necessity of maintaining the balance of supply and demand in the global market," he stated.
Saudi Arabia will also increase its production by 42,000 barrels, Iraq by 17,000, the UAE by 12,000, Kuwait by 11,000, Kazakhstan by 6,000, Algeria by 4,000, and Oman by 3,000 barrels per day.
According to Dmitry Kasatkin, managing partner at Kasatkin Consulting, the cartel expects an improvement in the overall economic situation globally, particularly in the Asian region.
"However, in general, this decision appears to be a consistent implementation of a strategy to increase OPEC's share in the global oil markets. For Russia, this is positive in terms of reducing the volumes necessary to compensate for exceeding previous quotas. It is important to note that OPEC maintains flexibility, and during future meetings, if the results of monitoring the demand/supply balance change, quotas may be adjusted. Overall, this decision can be characterized as very cautious, equating to an increase of +0.4% cent in daily production for Russia,” Kasatkin remarked.
The cartel's statement mentions that the eight OPEC+ countries will conduct monthly meetings to review market conditions, compliance, and compensation. The next meeting of the eight nations is scheduled for October 5, 2025.
Why This Decision Was Made
The OPEC+ decision is quite predictable, according to Valery Andrianov, an associate professor at the Financial University under the Government of the Russian Federation.
"The alliance is gradually increasing production despite the fairly unstable state of the global market. Moreover, this decision seems to be practically the only correct one, as OPEC+'s influence on pricing conditions is minimal currently, while the supply of oil from players not part of the agreement is on the rise."
Ekaterina Kosareva, managing partner at VMT Consulting, reminds us that over the past 20 years, U.S. production has increased 3.5 times, transforming the country from the world’s largest fuel importer to a net exporter of oil and petroleum products.
"Currently, the United States satisfies over one-fifth of Europe’s demand for oil and petroleum products," Kosareva states, noting that this situation may not be favorable to all oil producers, especially when some are cutting back on production to support oil prices and future investments.
Therefore, Andrianov believes that at this stage, the primary objective is to gradually increase production at such a pace that, on one hand, does not lead to a sharp market crash, and on the other, satisfies the appetites of the main alliance participants without allowing external competitors to "eat into" their market share.
"It is clear that there will be some dissatisfaction. Countries with greater capabilities and potential for production growth advocate for a more active exit from restrictions, while nations lacking such capacities are interested in maintaining relatively high prices," he concluded.
Agreeing with this perspective is Sergey Tereshin, General Director of Open Oil Market. He observes that the overall increase in quotas will not be significant: only 137,000 barrels per day.
"This is the lowest increase in the past six months. Thus, the latest decision will not destabilize the market," he believes.
It is noteworthy that in the penultimate meeting in August, OPEC+ countries voluntarily reducing oil production decided to increase production in September by 547,000 barrels per day.
What Will Happen to Oil Prices
Oil prices started reacting to insider information about the upcoming increase even before the weekend. If on Tuesday, amidst skeptical investor sentiment regarding peace talks between Russia and Ukraine, Brent was priced at $69.14 per barrel, by the close of trading on Friday, the same quantity of raw material was down to $65.50. This information comes from the London ICE exchange.
The cause for this shift was information disseminated by Western news agencies regarding the results of the Sunday meeting of the eight OPEC+ participating countries.
Bloomberg, citing its sources, reported that Russia, Saudi Arabia, the UAE, Algeria, Iraq, Kazakhstan, Kuwait, and Oman preliminarily agreed to increase oil production in October by 137,000 barrels per day from September levels. Furthermore, one Reuters source claimed that the production increase in October could reach approximately 200,000 to 350,000 barrels per day.
The market immediately responded to this news with a drop in prices, and now industry experts do not anticipate significant fluctuations in oil prices.
According to Valery Andrianov, recent market conditions have responded sluggishly to OPEC+ decisions—due both to the predominance of other pricing factors and the absolute predictability of the alliance's actions.
"Prices may increase slightly in the short term—as a reaction from trading robotic systems to external signals. However, in the medium term, this influence will be minimal, giving way to other, more significant factors, such as demand from major consumers and levels of geopolitical tension."
Ekaterina Kosareva added that threats of more stringent sanctions against Russian oil or other friendly countries could inhibit further price declines.
By the end of the year, Brent prices are expected to remain below $70 per barrel, with predictions of a drop to $60 per barrel next year, according to Sergey Tereshin.
Source: Izvestia
