OPEC+ Quotas will increase 548,000 bpd in August

[dan_s]

Actual export increases will be MUCH LOWER.
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The OPEC+ group of eight, the V8 (Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman), which made voluntary cuts and began unwinding them in April, met virtually today and decided to raise the production ceiling by 548 kb/d in August, four times the initial increase planned last December. This exceeded market expectations of 411 kb/d.

Here is an excerpt from the press release

“In view of a steady global economic outlook and current healthy market fundamentals, as reflected in the low oil inventories, and in accordance with the decision agreed upon on 5 December 2024 to start a gradual and flexible return of the 2.2 million barrels per day voluntary adjustments starting from 1 April 2025, the eight participating countries will implement a production adjustment of 548 thousand barrels per day in August 2025 from July 2025 required production level. This is equivalent to four monthly increments as detailed in the table below. The gradual increases may be paused or reversed subject to evolving market conditions. This flexibility will allow the group to continue to support oil market stability.”
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OPEC has the most accurate information about global oil supply & demand. It is becoming clear that the global oil market is much tighter that most people believe it is.
> Due to the FEAR of the Tariff War, EIA and IEA are (in my opinion) underestimating demand for oil-based products. FEAR of the Tariff War (and the associated FEAR of a global recession) should fade by the end of July since several favorable trade deals for the U.S. will be announced this month.
> With FEAR of recession fading and no sign of inflation, the FED should begin lowering interest rates. Lower interest rates and the financial stimulus in the One Big Beautiful Bill, should help the U.S. economy.
> U.S. "Big 3" Petroleum inventories (crude oil, gasoline and distillates) are all below normal for this time of year. < I have never seen distillate inventories more than 20% below normal.
> U.S. crude oil production has peaked and will go on decline in 2H 2025 because there is no way oil production can increase at the current active rig count.
> Saudi Arabia is the only OPEC+ country with significant ability to increase oil exports. Half of the OPEC+ cannot produce up to the quotas in place for July.
> The Paper Trader may react to the higher-than-expected increase in the quotas for August and push WTI lower on Monday, but the increase in "paper barrels" is not an increase in global oil supply.