Ministers from eight OPEC+ volunteer countries held an online meeting on September 7 to discuss the current situation in the oil market and made the decision to continue increasing production in October by 137,000 barrels per day compared to September levels. Experts note that the cartel has reduced its production growth rate by nearly four times, which can be considered the only correct decision, as under current conditions OPEC+'s influence on price dynamics is minimal, while oil supply from non-member players is increasing.
Agreement Details
The eight OPEC+ countries — Russia, Saudi Arabia, the UAE, Algeria, Iraq, Kazakhstan, Kuwait, and Oman — have preliminarily agreed to increase oil production in October by 137,000 barrels per day from the September level. This information is reflected in an official statement from the oil cartel.
According to the statement, "considering the stable prospects for the global economy and current favorable market indicators, reflected in low oil inventories, the eight participating countries have decided to adjust production by 137,000 barrels per day from the 1.65 million barrels per day of additional voluntary adjustments announced in April 2023."
The oil cartel emphasized that "the 1.65 million barrels per day may be returned partially or fully depending on changing market conditions and gradually."
"The countries will continue to closely monitor and assess market conditions, and in their ongoing efforts to maintain market stability, they confirmed the importance of adopting a cautious approach and preserving full flexibility to suspend or cancel additional voluntary production adjustments," the statement said.
Russian Deputy Prime Minister Alexander Novak, commenting on the decision of OPEC+ member countries on the television channel "Russia 24," stated that Russia will increase production by 42,000 barrels per day.
"We are fulfilling our obligations in full. From the perspective of compensation and increasing volumes, which were accepted in previous periods. This allows us to ensure growth in our oil sector. This has a positive effect on our economy and the oil sector as a whole. Therefore, we will continue to make these decisions based on the need to maintain the balance of supply and demand in the global market," he said.
Saudi Arabia will also increase production by 42,000 barrels per day. Iraq will increase by 17,000, the UAE by 12,000, Kuwait by 11,000, Kazakhstan by 6,000, Algeria by 4,000, and Oman by 3,000 barrels per day.
According to Dmitry Kasatkin, managing partner of Kasatkin Consulting, the cartel expects an improvement in the overall economic situation globally, primarily in the Asian region.
"However, overall, the decision appears to be a consistent implementation of a strategy to increase OPEC's share in global oil markets. For Russia, this is positive in terms of reducing volumes that need to be compensated within the framework of exceeding past quotas. It is important to note that OPEC maintains flexibility, and during subsequent meetings, if monitoring results of supply/demand balance change, quotas may be adjusted. Overall, this decision can be characterized as a very cautious adjustment, translating to a +0.4% increase from daily production for Russia," Kasatkin stated.
As noted in the cartel's statement, the eight OPEC+ countries will hold monthly meetings to review market conditions, compliance, and compensation. The next meeting of the eight countries is scheduled for October 5, 2025.
Reasoning Behind the Decision
The OPEC+ decision is quite predictable, according to Valery Andrianov, an associate professor at the Financial University under the Government of the Russian Federation.
"The alliance is gradually increasing production despite a rather unstable situation in the global market. Moreover, this decision seems to be practically the only correct one, as under current conditions, OPEC+'s influence on price dynamics is minimal, while oil supply from non-member players is on the rise."
Ekaterina Kosareva, managing partner of VMT Consult, reminds us that in the last 20 years, production in the U.S. has increased by 3.5 times, turning the country from being the world's largest fuel importer into a net exporter of oil and petroleum products.
"As of now, the U.S. satisfies over one-fifth of Europe's demand for oil and petroleum products," Kosareva said, noting that not all oil producers may favor this new situation, especially when some countries opt for production cuts to support oil prices and future investments.
Therefore, Andrianov believes that at this point, the primary objective is to gradually increase production at a pace that neither leads to a sharp market collapse nor allows main alliance participants' appetites to be satisfied while preventing external competitors from gaining market share.
"It is clear that there will be dissenters. Countries with greater capabilities and prospects for increasing production advocate for a more active exit from restrictions, while those without such opportunities are interested in maintaining relatively high prices," the expert adds.
Sergey Tereshin, CEO of Open Oil Market, agrees with this assessment, pointing out that the overall increase in quotas will not be significant: only 137,000 barrels per day.
"This is the lowest growth in the past six months. Therefore, the recent decision will not lead to market destabilization," he believes.
It should be noted that at the penultimate meeting in August, the eight OPEC+ countries voluntarily cutting production decided to increase output in September by 547,000 barrels per day.
Impact on Oil Prices
Oil prices began to react to insider information about the upcoming increase even before the weekend. If, on Tuesday, amid skeptical investor sentiments regarding peace talks between Russia and Ukraine, Brent was priced at $69.14 per barrel, by Friday's market close, the same volume of crude was being offered at $65.50. This was reported by data from the London ICE exchange.
The reason for this decline was information disseminated by Western news agencies about the outcomes of the Sunday meeting of the eight OPEC+ member countries.
Bloomberg, citing its sources, reported that Russia, Saudi Arabia, the UAE, Algeria, Iraq, Kazakhstan, Kuwait, and Oman had preliminarily agreed to increase oil production in October by 137,000 barrels per day compared to September levels. One source from Reuters claimed that the production increase in October could be around 200,000 to 350,000 barrels per day.
The market immediately responded to this increase with falling quotes, and industry experts currently do not expect significant fluctuations in oil prices.
According to Valery Andrianov, the market situation has been sluggish in responding to OPEC+ decisions — due both to the predominance of other price-forming factors and the absolute predictability of the alliance's actions.
"Prices may rise slightly in the short term — as a reaction from automated trading systems to external signals. But in the medium term, this influence is minimized, giving way to other, more significant factors, such as demand from major consumers and the level of geopolitical tension."
Ekaterina Kosareva added that the threat of more severe sanctions against Russian oil or other friendly countries may restrain further price declines.
By the end of the year, Brent prices will remain below $70 per barrel, and next year, they may drop to $60 per barrel, predicts Sergey Tereshin.
Source: Izvestia
