Karishma Vanjani

The Organization of the Petroleum Exporting Countries and its allies, or OPEC+, said that it has agreed to raise oil output by 548,000 barrels a day in August on Saturday.

The announcement came after the group's first meeting since the Iran-Israel conflict in June and the U.S.'s strikes on Iranian nuclear facilities that same month.

OPEC+, which includes Iraq, Saudi Arabia and Russia, cited "steady global economic outlook and current healthy market fundamentals" for the larger-than-expected hike on Saturday. OPEC+ members will meet on Aug. 3 to decide on September production levels.

The planned uptick in production marks a significant jump: OPEC+ increased supply by 411,000 barrels a day in May, June, and July. Another 411,000 hike was widely expected for August.

The ramp-up next month could hurt oil markets, which now need to see demand quickly ramp up to match a larger supply of oil. Prices of Brent crude, the global benchmark, are already down 8.5% this year to $68.51 per barrel.

Analysts expect OPEC+ to keep its foot on the pedal. "With the mood that OPEC+ have been in since its pivot in April, we expect them to continue to raise production quotas by [about 400,000 barrels per day] each month, " wrote Kieran Tompkins, a climate and commodities economist at Capital Economics on Friday. He expects Brent crude prices fall to $60 by end of 2025. Bank of America listed a target of $64 for the second half of 2025 last week.

Oil prices have erased gains spurred by the recent conflict between Iran and Israel that also saw U.S involvement. Prices were near $80 by June 19, as investors worried about potential disruptions impacting the Strait of Hormuz, a waterway near Iran through which 30% of the world's seaborne oil trade flows.

OPEC+ made sizable cuts in 2022 and 2023 to support prices, but as the group faces competition from non-OPEC+ producers -- such as the U.S., which is lobbying for lower oil prices to restrain inflation -- the collective may be looking to increase market share.

"This surge in production appears to reflect a deliberate shift in strategy: producers, notably Saudi Arabia and Russia, are increasingly prioritizing market share and revenue through volume, rather than price, " wrote Daniela Sabin Hathorn, senior market analyst at Capital.com in early June.

Write to Karishma Vanjani at karishma.vanjani@dowjones.com

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July 05, 2025 11:37 ET (15:37 GMT)

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