OPEC+ to increase oil production from October, prioritizing protecting market share

Last weekend, OPEC+ surprised the market by announcing it would increase oil production in October by an additional 137,000 barrels per day. This is a rare reversal of previous production cuts that the group has maintained for years to stabilize the market.

OPEC+ has been gradually restoring cuts of 2.5 million barrels per day since April. With the new decision, the eight-member group will continue to ease 1.65 million barrels per day more than a year ahead of schedule.

Target to regain market share

Experts say the move is not just about adding production, but also a clear message: OPEC+ is willing to accept softer oil prices to protect its position in the market.

Saudi Arabia, the UAE and Iraq are the countries with the most capacity to increase production, and the move to “open the valve” has more strategic significance than actual volume value.

Meanwhile, Russia needs high prices to offset its budget, which is under pressure from sanctions. This divergence of interests is revealing cracks within OPEC+.

Risk of oversupply and competition with US shale oil

The market could face a supply glut by 2026, as the US hit a record 13.6 million barrels per day in June, according to Macquarie analyst Walt Chancellor. Despite the drop in rig counts, US production remains high and could offset any shortfall if oil prices fall.

He believes that if OPEC+ continues to maintain this strategy, WTI oil prices could fall to $50–55/barrel, a level low enough to force US shale oil to cut production.

Impact on world oil prices

The OPEC+ decision coincided with macro turmoil in the U.S., with a weak August jobs report pushing Treasury yields lower and prompting markets to bet the Fed will cut interest rates three times before the end of the year.

OPEC+ is scheduled to meet next on October 5. The alliance said it would be flexible and could accelerate, pause or reverse production increases depending on market developments.