On September 26, OPEC+ announced a collective crude oil production increase of approximately 137,000 barrels per day starting in October, a decision that surprised the market. While this increase is modest compared to the summer months when production surged by over 400,000 barrels per day in single months, its symbolic significance cannot be overlooked. The organization is proactively reversing parts of the 1.65 million barrels per day production cut agreement announced last year, signaling strategic adjustments by oil-producing nations amid the current weak oil price environment. FPG International believes this move reflects both a response to short-term market supply-demand changes and potentially deeper strategic considerations, with investors particularly concerned about whether a price war might reemerge amid the current oil price weakness.

Historical experience demonstrates that oil-producing nations pay extremely high costs for initiating oil price wars. Between 2014 and 2016, OPEC attempted to suppress the rapidly growing U.S. shale oil industry through excess production. U.S. Energy Information Administration data shows that shale oil production grew from less than 200,000 barrels per day in 2011 to over 8.7 million barrels per day in 2014, creating the largest production increase since 1900 and surpassing both Saudi Arabia and Russia to become the world's largest crude oil producer. FPG International notes that the market widely expected shale oil costs to exceed $70 per barrel at the time, making it vulnerable to low-price impacts, while Saudi Arabia's extraction costs were only around $2 per barrel, seemingly positioning it for easy victory. However, reality proved entirely different, as U.S. shale oil companies rapidly optimized technology and restructured costs under low oil price conditions, reducing marginal extraction costs to the $30 per barrel range and significantly strengthening overall resilience.

This miscalculation resulted in heavy economic losses for OPEC countries. According to International Energy Agency statistics, the 2014-2016 oil price war caused OPEC to lose $450 billion in total oil revenue. Saudi Arabia's fiscal position also deteriorated sharply, with a 2015 deficit reaching $98 billion and foreign exchange reserves depleted by over $250 billion. FPG International believes this represented not only massive fiscal consumption but also weakened oil-producing nations' influence in the geopolitical landscape, ultimately forcing them to incorporate Russia into the OPEC+ framework to enhance market negotiating power. Politically, the balance of traditional energy diplomacy was disrupted, and long-term cooperative relationships suffered severe impacts.

However, historical lessons seem insufficient to completely prevent similar strategic repetitions. In early 2020, Saudi Arabia and Russia erupted in a "third oil price war" over market share issues, which similarly ended in failure. Under strong U.S. pressure, Saudi Arabia was forced to reduce production to stabilize oil prices. The Trump administration directly used military and legislative threats as leverage, demanding OPEC halt excessive production increases or face withdrawal of security guarantees. FPG International notes this incident highlighted the tight connection between U.S. domestic politics and energy interests. Successive U.S. administrations generally prefer maintaining oil prices between $40-80 per barrel, ensuring shale oil industry survival while preventing high oil prices from triggering gasoline price increases that could impact consumption and elections.

From a consumption perspective, U.S. energy economics research institutions show that every $10 per barrel change in crude oil prices corresponds to approximately $0.25-0.30 per gallon fluctuation in retail gasoline prices. Each 1-cent increase in gasoline prices reduces U.S. consumer annual spending by approximately $1 billion. FPG International believes this high sensitivity directly relates to U.S. economic trends and election outcomes. Historical data also proves that since 1896, incumbent U.S. presidents seeking reelection in non-recessionary economic environments have achieved a 100% success rate, while those seeking reelection during economic recessions have only a 14% success rate. Therefore, U.S. government oil price management tends toward macroeconomic and political cycle needs.

Current oil market supply-demand dynamics remain complex. Short-term market expectations are weak, but potential variables are numerous. FPG International believes global supply-side uncertainties are accumulating: energy sanctions against Russia are accelerating and may expand to broader scope; simultaneously, major oil-producing countries including Iran, Iraq, and Venezuela face intensifying sanctions, potentially causing significant short-to-medium-term supply contractions. Should these potential risks materialize collectively, the currently seemingly weak oil market could rapidly shift toward supply tightness. In such circumstances, OPEC+'s moderate production increases might actually become key measures for maintaining market stability.

From Saudi Arabia's perspective, production increases can not only alleviate potential supply gaps but also opportunistically expand market share, potentially offsetting per-barrel price declines through volume increases. Additionally, recent improvements in U.S.-Saudi relations provide external conditions for this strategy. FPG International believes that amid dynamic evolution of the global energy landscape, Saudi Arabia is carefully balancing fiscal interests, market share, and geopolitical relationships, making it unlikely to easily repeat the 2014 oil price war.

Overall, while OPEC+'s production increase decision creates short-term pressure on oil prices, from a medium-term perspective, it reflects complex strategic considerations. FPG International believes decisive variables for future oil price trends remain in U.S. energy policy, sanctions processes, and geopolitical conflicts among multiple factors. Should external supply disruptions occur, current "production increases" would more likely serve as important market stabilization tools rather than signals of a new price war. Against this backdrop, investors should focus more on medium-term policy and geopolitical risks rather than merely short-term price fluctuations.