The cartel known as the Organization of the Petroleum Exporting Countries and its allies (OPEC+) has agreed to another production increase starting in October.
The latest %Oil production hike comes as OPEC+ leader Saudi Arabia tries to regain market share, and amid calls from U.S. President Donald Trump for lower gas prices at the pumps.
However, oil prices are actually up 2% on Sept. 8 as markets view the latest increase in output as modest compared to previous production hikes that have been ongoing since April this year.
OPEC+ agreed to raise production from October by 137,000 barrels per day. That’s much lower than the monthly increases of 555,000 barrels a day seen in each of September and August.
The latest move also means that OPEC+ has begun to unwind a second tranche of cuts of about 1.65 million barrels per day more than a year ahead of schedule.
The eight-member group has already fully unwound the first tranche of 2.5 million barrels per day since April, equivalent to about 2.4% of global demand.
OPEC+ has slowed its production increase as global energy demand contracts, say analysts. The cartel’s next meeting is scheduled for Oct. 5 of this year.
The increase in crude oil production has led to a fall in oil prices of around 15% this year, pushing oil companies’ profits to their lowest level since the Covid-19 pandemic.
The situation has pressured stocks of oil majors such as %Chevron (NYSE: $CVX), %Shell (NYSE: $SHEL) and %BritishPetroleum (NYSE: $BP).
However, crude prices are now rising on news that the production increase for October is less than feared.
Brent crude oil (TVC: $OIL), the international standard, is up 2.03% and trading at $66.82 U.S. a barrel, while West Texas Intermediate (WTI) crude, the U.S. benchmark, is up 1.94% and at $63.06 U.S.
