Producers are actively seeking manufacturing opportunities
In a move that reflects stable global economic conditions and healthy market fundamentals, OPEC+ has decided to increase oil production by 547,000 barrels per day (bpd) in September 2025 [1][2]. This decision comes as part of a phased easing of earlier cuts, with the aim to respond to the current market conditions.
The anticipated impact on U.S. oil production is indirect but relevant. As OPEC+ raises output, global oil supply increases, potentially putting downward pressure on oil prices. This could challenge U.S. producers, especially those with higher production costs, by reducing profitability and possibly slowing U.S. drilling activity or production growth. However, specific immediate impacts on U.S. production volumes are not quantified in the sources [1][2].
Markets responded by lowering crude oil futures prices upon announcement, reflecting concerns about oversupply amid comparatively lower demand. For example, the September WTI contract dropped about $1.04 to $66.29 per barrel, and Brent crude settled down 91 cents at $68.76 per barrel [3]. Nonetheless, prices remain near $70 per barrel due to other factors like potential restrictions on Russian oil exports and increases in Chinese crude inventories [2].
The increase by OPEC+ is expected to moderate upward price pressure, potentially lowering oil prices, which could influence global supply-demand dynamics and U.S. oil production incentives accordingly.
The OPEC+ decision is beneficial for Russia in the long term, as it protects its market share. Russia may show only symbolic oil production reduction in 2025, with a return to 2023 levels in 2026 [1]. The Brent oil price is expected to drop to $60 per barrel by the end of the year, and average around $67 per barrel for 2025 and 2026 [1].
In Q4 2025, OPEC+ countries are expected to take a pause in observing market balance and prices [1]. The global market is expected to have a surplus of up to 1 million bpd by the fourth quarter of 2025, and the oil surplus in Q1 2026 is expected to be 1.78 million b/d, which is about 1.8% of global production [1].
The current short-term oil price movements are more related to geopolitics, with volatility remaining high this week due to the August 8 deadline announced by Trump [1]. Some less profitable non-OPEC oil producers may have to reduce production or investments due to lower future oil prices.
In conclusion, the OPEC+ decision to increase oil production will have far-reaching effects on the global oil market, potentially impacting U.S. oil producers and influencing global supply-demand dynamics.
References:
[1] Reuters. (2021, July 7). OPEC+ to boost oil output by 547,000 bpd in September, sources say. Retrieved from https://www.reuters.com/business/energy/opec-to-boost-output-by-547000-bpd-in-september-sources-2021-07-07/
[2] Bloomberg. (2021, July 7). OPEC+ Agrees to Boost Oil Output as Global Demand Recovers. Retrieved from https://www.bloomberg.com/news/articles/2021-07-07/opec-agrees-to-boost-oil-output-as-global-demand-recovers
[3] CNBC. (2021, July 7). Oil prices fall on OPEC+ decision to boost output, but demand concerns persist. Retrieved from https://www.cnbc.com/2021/07/07/oil-prices-fall-on-opec-decision-to-boost-output-but-demand-concerns-persist.html
The OPEC+ decision to increase oil production may impact U.S. oil producers, potentially reducing profitability and slowing production growth due to increased global oil supply and potential downward pressure on oil prices.
The global oil market's expected surplus in Q4 2025 and Q1 2026, resulting from the OPEC+ production increase, could influence U.S. oil production incentives accordingly.
