Does OPEC Want a Price War?

Does OPEC want a price war?

That was the question Macquarie strategists, including Walt Chancellor, asked in an oil and gas report sent to Rigzone by the Macquarie team on Monday.

“As a long-term strategy, we think not,” the strategists said in the report, answering the question.

“That said, tactically, this latest move feels a bit like ‘chicken’ from a game theory perspective,” they added.

In the report, the Macquarie strategists noted that OPEC+ will increase supply again in October, “as the group announced it will now begin to work through a tranche of ~1.7 million barrels per day of cuts dating back to April 2023”.

The strategists said in the report that, “although the recent shift of OPEC’s strategy wasn’t altogether shocking, this latest move appears more difficult to reconcile, as we see the oil market standing on the precipice of bruising oversupply”.

“We believe this expectation of a 2026 oil glut has become something of a consensus view. Further, the relatively meager global stock draws observed across Q3 to date should offer a degree of visibility to a softening market in coming quarters despite continued physical resilience,” they added.

The strategists warned in the report that they do not think the latest OPEC+ announcement “can merely be taken at face value”.

“Given the conditions laid out above, coupled with non-OPEC growth, perhaps OPEC has resolved to power ahead and not be the first to ‘swerve’ by pausing increases,” the strategists noted in the report.

“As such, the swerving along the oil supply path would [be] reserved for more price-sensitive producers, with particular focus on U.S. shale,” they added.

“While we think OPEC may (again) ultimately learn that the price to stymie shale is unacceptably low, given the passage of time and structural changes to the industry, from OPEC’s perspective, a more vigorous test of that supposition may be on order,” they continued.

The Macquarie strategists noted in the report that, for some, OPEC+’s latest announcement “may be a non-event, with WTI already nearing $60 per barrel and the expectation (not ours) of precipitous shale declines below this threshold”.

“We have maintained the level to shift U.S. supply toward declines is more likely the $50-55 WTI range, given underlying producer economics,” they added.

“As a real-time check-in on U.S. supply, we note a record 13.6 million barrels per day of oil production in June, with implied supply from weekly balances suggesting further potential growth in subsequent months,” the strategists said.

“Looking forward, while rig count declines have exceeded our expectations, we again note the potential for productivity gains to provide an offset,” they continued.

“All told, while the potential for seasonal U.S. declines to emerge in winter persists, sustainable declines may require a full step (or two) lower in crude prices,” they went on to state.

The strategists warned in the report that, “absent substantial supply disruptions or an OPEC reversal”, they “see clear potential for WTI to move into the $50s (or below) as builds mount across late ‘25/early ‘26”.

“That said, geopolitical risk is not absent,” they highlighted.

Decisive Pivot

In an oil market update sent to Rigzone by the Rystad Energy team on Monday, Rystad Chief Economist Claudio Galimberti said, “Riyadh and its allies signaled a decisive pivot: defending market share now outweighs defending prices”.

“The headline volume may look marginal, but the messaging is not. By allowing supply back into a market moving toward surplus, OPEC+ is playing offense, not defense. Traders have been put on notice,” Galimberti warned.

“Structural capacity constraints mean that only a handful of members – primarily Saudi Arabia, the UAE, and Iraq – can deliver significant volume uptick, and the compensation mechanism will further cap net additions,” he added.

“But optics dominate barrels in this phase. The psychological signal – that the group is prepared to tolerate softer prices to secure long-term relevance – has reset expectations heading into the fourth quarter,” Galimberti went on to note.

Rystad Energy stated in this update that, beneath the surface, fault lines within OPEC+ are widening.

“For Russia, every extra dollar matters as crude revenues prop up its budget and offset sanctions-driven strain,” Rystad said in the update.

“Gulf producers, by contrast, are playing a longer game. Saudi Arabia and the UAE are betting that near-term revenue pain is worth locking in market share in the years ahead, particularly as global oil demand growth slows,” it added.

“For now, the Gulf camp is setting the script, and Moscow is playing along,” it continued.

Rystad went on to note in the update that, for oil markets, the next seven days are about how traders digest OPEC+’s pivot.

“Expect Brent price volatility as the market reprices its balance narrative: softer prices are tolerated, but OPEC+’s grip on swing supply remains firm,” it said.

Cautious First Step

Ole R. Hvalbye, Commodities Analyst at Skandinaviska Enskilda Banken AB (SEB), highlighted in a report sent to Rigzone on Tuesday by the SEB team that OPEC+ “approved a 137,000 barrels per day increase in collective output beginning in October” on Sunday, describing the move as “a cautious first step in unwinding the final tranche of 1.66 million barrels per day in voluntary cuts, originally set to remain off the market through end-2026”.

Hvalbye noted in the report that “further adjustments will depend on ‘evolving market conditions’”. He also pointed out that, “while the pace is modest – especially relative to prior monthly hikes – the signal is clear: OPEC+ is methodically re-entering the market with a strategic intent to reclaim lost market share, rather than defend high prices”.

“This shift in tone comes as Saudi Aramco also trimmed its official selling prices for Asian buyers, further reinforcing the group’s tilt toward a volume-over-price strategy,” Hvalbye stated in the report.

“We see this as a clear message: OPEC+ intends to expand market share through steady production increases, and a lower price point – potentially below $65 per barrel – may be necessary to stimulate demand and crowd out higher-cost competitors, particularly U.S. shale, where average break-evens remain around WTI $50 per barrel,” he added.

In a market analysis sent to Rigzone on Monday, Joseph Dahrieh, Managing Principal at Tickmill, highlighted that oil prices “surged by over two percent, with the primary catalyst being OPEC+’s decision to significantly slow its pace of production increases for October 2025”.

“The group announced it would raise output by only 137,000 barrels per day, a figure that was much smaller than the market had anticipated,” he added.

“This unexpectedly conservative stance marks a sharp reversal from the more substantial hikes of recent months, such as the approximately 555,000 bpd increases in August and September,” he continued.

Rigzone has contacted OPEC, the U.S. Department of Energy, and industry body the American Petroleum Institute for comment on Macquarie’s report and Hvalbye’s statements. Rigzone has also contacted OPEC for comment on Rystad’s market update and the analysis from Dahrieh. At the time of writing, none of the above have responded to Rigzone.

Production Adjustment

A statement posted on OPEC’s website on Sunday revealed that Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman “decided to implement a production adjustment of 137,000 barrels per day” at a virtual meeting on September 7.

“The eight OPEC+ countries, which previously announced additional voluntary adjustments in April and November 2023 … met virtually on 7 September 2025 to review global market conditions and outlook,” the statement noted.

“In view of a steady global economic outlook and current healthy market fundamentals, as reflected in the low oil inventories, the eight participating countries decided to implement a production adjustment of 137,000 barrels per day from the 1.65 million barrels per day additional voluntary adjustments announced in April 2023,” the statement added.

This adjustment will be implemented in October 2025, the statement said. A table accompanying the statement posted on OPEC’s site outlined that Saudi Arabia and Russia’s adjustment amounts to 42,000 barrels per day, each. Iraq’s comes to 17,000 barrels per day, the UAE’s is 12,000 barrels per day, Kuwait’s is 11,000 barrels per day, Kazakhstan’s is 6,000 barrels per day, Algeria’s is 4,000 barrels per day, and Oman’s is 3,000 barrels per day, the table outlined.

“The 1.65 million barrels per day may be returned in part or in full subject to evolving market conditions and in a gradual manner,” the statement posted on OPEC’s site noted.

“The countries will continue to closely monitor and assess market conditions, and in their continuous efforts to support market stability, they reaffirmed the importance of adopting a cautious approach and retaining full flexibility to pause or reverse the additional voluntary production adjustments, including the previously implemented voluntary adjustments of the 2.2 million barrels per day announced in November 2023,” it added.

“The eight OPEC+ countries also noted that this measure will provide an opportunity for the participating countries to accelerate their compensation,” it continued.

“The eight countries reiterated their collective commitment to achieve full conformity with the Declaration of Cooperation, including the additional voluntary production adjustments that will be monitored by the Joint Ministerial Monitoring Committee (JMMC),” the statement went on to note.

The countries also “confirmed their intention to fully compensate for any overproduced volume since January 2024”, according to the statement on OPEC’s site, which noted that the eight OPEC+ countries will hold monthly meetings to review market conditions, conformity, and compensation. The statement revealed that the eight countries will meet again on October 5.

The table accompanying the statement highlighted that October 2025 “required production” is 10.020 million barrels per day for Saudi Arabia, 9.491 million barrels per day for Russia, 4.237 million barrels per day for Iraq, 3.387 million barrels per day for the UAE, 2.559 million barrels per day for Kuwait, 1.556 million barrels per day for Kazakhstan, 963,000 barrels per day for Algeria, and 804,000 barrels per day for Oman.

To contact the author, email andreas.exarheas@rigzone.com