OPEC+ may consider a much bigger increase in oil supply for July, with a jump of 411,000 barrels per day being one of the main options. That’s three times higher than what was planned earlier. The final decision will be taken on June 1, Bloomberg reported, quoting unnamed delegates. The move could push oil supply above what the market needs and has already caused oil prices to drop.
The oil-producing group has already raised supply for May and June by the same amount. These increases mark a big change in the group’s usual approach. For years, OPEC+ cut output to support oil prices. But now, the group seems to be more focused on increasing supply, even if prices fall.
According to Bloomberg, the July hike will be discussed in a video call among eight key members on June 1. All 22 members of the group will meet earlier on May 28 to look at production quotas for 2025 and 2026.
OPEC+ has said the hikes are meant to meet demand, but some officials have privately said the real reasons include punishing countries that are not following the rules, regaining lost market share, and responding to pressure from U.S. President Donald Trump.
Saudi Arabia, the group’s most powerful member, recently warned countries like Iraq and Kazakhstan that it could raise supply further if they do not stick to their quotas. Kazakhstan has promised to make changes but has done little so far. International oil companies operating in the country are still exporting close to record levels.
Harry Tchiliguirian from Onyx Capital Group told Reuters, “We’re seeing the market reacting to evidence that OPEC is letting go of a strategy to defend price in favour of market share. It’s a bit like taking off a Band-Aid; you do it in one fell swoop.”
The group is slowly reversing earlier supply cuts. Reuters has reported that OPEC+ may add back as much as 2.2 million barrels a day by November. In a note on Wednesday, RBC Capital’s Helima Croft said that the 411,000 barrel-per-day increase for July is “the most likely outcome,” mostly coming from Saudi Arabia.
“A key question will be whether the voluntary cut will be fully drawn down before the leaves turn brown in many parts of the world, in line with the original taper schedule,” she said.
News of the possible hike has already affected prices. Brent crude fell 64 cents, or 1%, to $64.27 a barrel by 0800 GMT on Thursday. U.S. West Texas Intermediate dropped 59 cents, or 1%, to $60.98.
Prices also came under pressure from U.S. data released on Wednesday. The Energy Information Administration said crude stocks rose by 1.3 million barrels to 443.2 million barrels in the week ended May 16. Analysts had expected stocks to fall by the same amount. The increase came as U.S. crude imports hit a six-week high and demand for gasoline and diesel dropped.
Emril Jamil at LSEG Oil Research said the surprise rise in U.S. stockpiles would “exert downward pressure on prices, particularly on WTI,” and may lead to more U.S. exports to Europe and Asia.
At the same time, a rise in U.S. 10-year Treasury yields shows that oil supply may be rising at a time when demand is weakening.
A Bloomberg survey of 32 oil traders and analysts found that 25 expect OPEC+ to approve the full 411,000 barrel-per-day hike. Five said the group might choose a smaller increase of 138,000 barrels per day instead.
OPEC+ first surprised markets with a big supply hike in April, just as President Trump launched his trade war. That move helped push oil prices to a four-year low near $60 a barrel in London. Prices later rose a bit after the U.S. eased some of its tariffs.
Still, most forecasters expect oil demand growth to slow in the rest of 2025. Last week, the International Energy Agency said weaker economic conditions would likely reduce oil demand after a strong first quarter.
Goldman Sachs now expects OPEC+ to agree on the July hike but to avoid any further increases for now.
(with inputs from agencies)
