Eight countries that belong to the oil cartel known as OPEC Plus said Sunday that they would boost oil production by 547,000 barrels a day beginning in September, the latest in a series of monthly increases that began in April.
The move, in effect, reverses a program of 2.2 million barrels a day in output cuts that was put in place in 2023 to tighten supply and prop up the markets.
The announcement from OPEC Plus was expected and so may have little impact on prices. “We expect a limited negative market reaction,” analysts at the investment bank Jefferies said in a note to clients after the announcement.
After years of pursuing production restraints, the group, led by Saudi Arabia, is taking advantage of what analysts view as a relatively short-term window in the oil market to boost output.
The United Arab Emirates and other countries have chafed at restraints on production that have opened the way for the United States and other producers outside OPEC Plus to pump more oil.
In addition, Saudi Arabia and other oil-producing countries appear to have an interest in pleasing President Trump, who wants lower gasoline prices for American drivers.
Mr. Trump has courted Saudi Arabia’s crown prince, Mohammed bin Salman, and other leaders in the region as commercial and strategic partners, and refrained from criticizing them over human rights issues.
Most of the production increases agreed to on Sunday are going to Saudi Arabia and other Persian Gulf producers like the United Arab Emirates, which is set to gain a 300,000-barrel-a-day increase. With the reversal of the 2023 cuts, the cartel’s, and the market’s, attention may now turn to other agreed-upon cuts amounting to roughly 3.6 million barrels a day.
The output boosts come as the International Energy Agency and other forecasters are painting a picture of a market in which oil supplies are likely to substantially exceed demand later this year and in 2026, potentially leading to a glut and lower prices.
Yet the Saudi-led group is shrugging off that pessimism. In their news release on Sunday, the producers said they were acting “in view of a steady global economic outlook and current healthy market fundamentals.”
Oil officials have said recently that “the additional volumes are being absorbed and that demand is holding up better than market expectations, especially in Asia,” the investment bank RBC Capital Markets said in a recent note to clients.
The increases are coming as refineries ramp up to supply fuel for summer driving and countries in the Persian Gulf region like Saudi Arabia step up the burning of crude oil to generate electricity for air conditioning to ward off the sweltering heat. Profits from refining crude into products like gasoline have also been strong, analysts say.
The International Energy Agency said in its latest Monthly Oil Report, published in July, that “price indicators point to a tighter physical oil market than suggested by the hefty surplus” in forecasts of supply and demand.
While prices for Brent crude, the international benchmark, briefly dipped below $60 a barrel in May, they have recovered to a moderate $69.50 a barrel.
The recent war between Israel and Iran and threats by the United States to tighten sanctions on Russia have highlighted the continuing geopolitical risks to oil supplies, pushing up prices, analysts say.
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