Opec+ has stunned the oil market by announcing a second consecutive monthly increase in production, this time by 411,000 barrels per day (b/d) for June, even as oil prices continue to slide due to concerns over oversupply and global economic weakness, reports the Financial Times.
The decision to boost production again comes despite a significant downturn in oil prices, which have fallen nearly 20% since April 2, with benchmark Brent crude slipping to $61 a barrel — its lowest level in four years. The drop in prices has been attributed to a combination of increased Opec+ supply and fears that US trade tariffs may dampen global economic activity.
Jorge León, a former Opec employee now with energy consultancy Rystad, described the move as a “bombshell” for the oil market, signaling a dramatic shift in the cartel’s strategy. “Last month’s decision was a wake-up call. Today’s decision is a definitive message that the Saudi-led group is changing strategy and pursuing market share after years of cutting production,” León said.
For the past three years, Opec+ had kept collective output reduced by nearly 6 million barrels per day (b/d) in an effort to support higher prices. This strategy helped keep crude prices above $90 a barrel through much of 2022. However, the approach has become less effective amid tepid global demand, rising US oil output, and increasing non-compliance with quotas by some cartel members.
Tensions within Opec+ have been mounting, particularly with Kazakhstan, which has been expanding its output from the Chevron-led Tengiz field and signaling a preference for national interests over group quotas. In response, Saudi Arabia, which had shouldered the largest share of production cuts, has begun to unwind those curbs and is now leading the push for this month’s increase.
Saudi officials, who had reduced their production by 2 million barrels per day (b/d) over the past three years, are reportedly frustrated by the lack of commitment from other members, including Kazakhstan and Iraq, who have exceeded their quotas. Despite the challenges posed by lower oil prices, Saudi Arabia seems prepared to bring back more supply to the market, even if it results in a prolonged period of lower prices for the remainder of 2025.
This shift in strategy is surprising, especially as Saudi Arabia is facing fiscal challenges from reduced oil revenues. However, the kingdom’s pivot suggests a growing desire to regain market share, even at the cost of lower prices.
Some analysts have raised questions about how much of the planned increase will actually materialize. Bjarne Schieldrop, chief commodities analyst at SEB, noted that Opec+ production fell by 200,000 b/d in April due to US sanctions on Venezuela. He suggested that the planned increases might be undermined if past quota violators, such as Kazakhstan, Iraq, and the UAE, scale back their output.
