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Opec+ announced another large increase in oil output for July in the latest sign that the cartel was intent on unwinding the first tranche of its long-standing production cuts as quickly as possible.
Eight members of the oil-producing group, including Saudi Arabia and Russia, said on Saturday that they would increase headline production in July by a combined 411,000 b/d.
The decision to fast-track the return of idled capacity for the third consecutive month means the group could add as much as 1.4mn b/d to the global market between April and the end of July.
Some of the eight countries involved are overproducing their quotas, meaning that the ultimate increase in Opec+ output may be lower. But the new supply will test the resilience of the oil price, which has already been battered by the economic uncertainty generated by President Donald Trump’s tariffs.
“OPEC+ isn’t just turning [on] the taps — they’re rewriting the script,” said Jorge León, a former OPEC employee now at energy consultancy Rystad. “May rang the alarm, June removed all doubt and . . . July feels like a loaded [gun] barrel.”
Opec+ has been holding back supply since 2022 in an attempt to prop up prices. A cut of 2mn b/d across all Opec+ members and a voluntary cut of 1.65mn b/d by eight members are due to remain in place until the end of 2026. A second voluntary cut of 2.2mn b/d by the same eight members was later imposed. This is the set of the curbs that is now being unwound.
When the cartel originally announced its long-delayed plan to unwind the voluntary cut this year, the agreement would have boosted the group’s combined production target by about 137,000 b/d per month between April 2025 and September 2026. At the current rate, the group will probably have restored all 2.2mn b/d in curbed output by the end of September 2025, a year ahead of schedule.
The rapid unwinding has been driven in large part by Saudi energy minister Abdulaziz bin Salman, who believed that the burden of the cuts was no longer being shared equitably. Saudi Arabia was shouldering the largest share of the cuts while other Opec+ members were consistently producing above their quotas, thereby reducing the overall impact of the effort.
In total, Saudi Arabia has reduced its output by one-fifth in the past three years to about 9mn b/d, the lowest since 2011 except during the coronavirus pandemic.
Given the cuts’ failure to maintain high prices, Riyadh has been keen to unwind the 2.2mn b/d tranche, which includes 1mn b/d of curbed production from Saudi Arabia, as quickly as possible, according to people familiar with the Saudi energy minister’s thinking.
Allowing output to rise and prices to fall has also helped curry favour with Trump, who lauded Saudi crown prince Mohammed bin Salman during a US visit to the region this month.
Saudi Arabia had sought to restore discipline by agreeing new plans to compensate for overproduction but some Opec members, in particular Kazakhstan, appear to have ignored those directives and continued to pump oil in excess of their quotas.
Kazakh deputy energy minister Alibek Zhamauov reportedly told Opec this week that his country would not curtail production, according to a statement published by the Russian news agency Interfax.
Analysts said the next question was whether the group would move to unwind the second set of voluntary cuts, representing 1.65mn b/d of idle capacity.
“That tranche of cuts was not expected to be addressed until at least early 2027 but with OPEC+ accelerating its output strategy and prices proving resilient, a broader recalibration of the group’s production ceiling may come much sooner than originally anticipated,” said Rystad’s Leon.
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