OPEC+ increases production beyond expectations, can crude oil prices withstand it?
author: Ann
2025-07-15
Although short, the increase in August was larger than expected, at 548,000 bpd. The eight OPEC+ members that are unwinding their production cuts are expected to significantly increase production again in September, with all of the 2.2 million bpd cuts returning to the market. However, no one is really sure how much crude oil production OPEC+ has actually increased these days, as some producers are producing below quota to make up for previous overproduction. Analysts agree that the outsized production increase is not that big.
OPEC+ continues to rely on strong summer crude oil demand to absorb the additional crude oil production. In the short term, the spot market appears tight, although oversupply in the fall and beyond could push oil prices further down. The fact that the crude oil market did not collapse after the weekend's OPEC+ decision suggests that there is no concern about oversupply at the moment, and the market has not completely escaped geopolitically driven volatility.
Immediately after the OPEC+ meeting, Saudi Arabia raised its official selling price for August crude oil shipped to Asia and Europe, betting on strong summer demand to absorb the additional supply. The current $60 a barrel price of oil may encourage buying in Asia as China continues to buy large quantities of crude at lower prices.
May and June arrivals will be strong as prices for cargoes that contracted a month or two ago are near four-year lows. But supplies are likely to contract in June for much of July and especially August, when oil prices surged to a four-month high during the Israel-Iran war.
This suggests that Asian buyers, including China and India, Asia's largest crude importers, may buy lower volumes when prices are high. Since U.S. President Donald Trump announced a ceasefire in late June, prices have largely returned to pre-conflict levels, again allowing price-sensitive opportunistic buyers to seek more supply.
AS Sahney, chairman of state-owned Indian Oil Corp, India's largest refiner, said earlier this week that current oil prices, up to $60 a barrel for Brent, are the "right place" for crude oil prices. "It still has room to go down," Sahney told NDTV Profit on Monday. "I see prices very close to $65, plus or minus a dollar or two, which is the right place for us to feel comfortable," Sahney told NDTV Profit on Monday.
OPEC+ continues to rely on strong summer crude oil demand to absorb the additional crude oil production. In the short term, the spot market appears tight, although oversupply in the fall and beyond could push oil prices further down. The fact that the crude oil market did not collapse after the weekend's OPEC+ decision suggests that there is no concern about oversupply at the moment, and the market has not completely escaped geopolitically driven volatility.
Immediately after the OPEC+ meeting, Saudi Arabia raised its official selling price for August crude oil shipped to Asia and Europe, betting on strong summer demand to absorb the additional supply. The current $60 a barrel price of oil may encourage buying in Asia as China continues to buy large quantities of crude at lower prices.
May and June arrivals will be strong as prices for cargoes that contracted a month or two ago are near four-year lows. But supplies are likely to contract in June for much of July and especially August, when oil prices surged to a four-month high during the Israel-Iran war.
This suggests that Asian buyers, including China and India, Asia's largest crude importers, may buy lower volumes when prices are high. Since U.S. President Donald Trump announced a ceasefire in late June, prices have largely returned to pre-conflict levels, again allowing price-sensitive opportunistic buyers to seek more supply.
AS Sahney, chairman of state-owned Indian Oil Corp, India's largest refiner, said earlier this week that current oil prices, up to $60 a barrel for Brent, are the "right place" for crude oil prices. "It still has room to go down," Sahney told NDTV Profit on Monday. "I see prices very close to $65, plus or minus a dollar or two, which is the right place for us to feel comfortable," Sahney told NDTV Profit on Monday.
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