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Why OPEC+ Is Pumping Oil Fast and Playing Hardball

OPEC+ blindsided oil market participants, again, with a larger-than-expected oil production hike for August.

Instead of the widely expected 411,000 barrels per day (bpd), the group of eight OPEC+ producers led by Saudi Arabia and Russia decided to add 548,000 bpd to their combined oil output next month.

OPEC+ motivated its decision for the supersized hike with “a steady global economic outlook and current healthy market fundamentals, as reflected in the low oil inventories.”

Aiming to take advantage of the peak summer demand, OPEC+ will lift August oil production by the equivalent of four initial monthly increments of 138,000 bpd.

Since starting to unwind the cuts earlier this year, OPEC+ producers Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman made a small output increase of 138,000 bpd in April and then began to aggressively raise production quotas by triple that amount – 411,000 bpd – for each of May, June, and July.

August will see the initial monthly increment quadrupled, while the eight OPEC+ members are expected to make another supersized increase in September, with which the 2.2 million bpd cuts will all be back on the market, at least the headline figures suggest so.

The key non-OPEC member in the OPEC+ pact, Russia, reaffirmed OPEC’s publicly stated reasoning for the superhike in August production, citing low inventories.

“Taking into account the robust global economic outlook and current market conditions reflected in low oil inventories, they (eight OPEC+ members) agreed to make a production adjustment of 548,000 barrels per day in August 2025,” the Russian government said this weekend.

Behind the “low inventories” narrative lie several other reasons for OPEC+ to accelerate the unwinding of the production cuts.

First is the notable shift in OPEC’s policy from defending oil prices to reclaiming market share, lost to U.S. shale and other higher-cost producers over the past three years when the OPEC+ alliance was seeking higher prices or at least a fairly high floor under prices.

With the drive to regain market share, OPEC+ and its leader, Saudi Arabia, appear to be willing to sustain short-term pain with lower oil revenues if the low oil prices sink U.S. shale growth, too.

The majority of executives at U.S. shale producers in Texas and New Mexico said in the latest Dallas Fed Energy Survey last week that their oil production would decrease slightly from June 2025 to June 2026 if the WTI price remained at $60 per barrel.

If collapsed to $50 per barrel, a total of 46 percent of executives expect their firms’ oil production would decrease significantly from June 2025 to June 2026, and another 42 percent anticipate their firms’ oil production would decrease slightly. The most frequently selected response among executives at large E&P firms was “decrease slightly,” whereas among executives at small E&P firms, it was “decrease significantly.”

The production hikes each month since April suggest that OPEC+ has also likely sought to be in President Trump’s good books, analysts say, as the U.S. President has campaigned on low energy prices and has called for low oil and gasoline prices and higher OPEC output.

In addition, OPEC+ continues to rely on strong summer oil demand to absorb the additional barrels. Analysts concur that the supersized hikes are not that supersized because some producers are pumping less than their quotas to compensate for previous overproduction.

The physical market appears to be tight in the near term, although the coming glut in the autumn and beyond is likely to push oil down.

Oil prices didn’t collapse following this weekend’s OPEC+ decision—a sign that there isn’t immediate fear of oversupply and that the market hasn’t shaken off entirely geopolitics-driven volatility.

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