Opec+ agrees in principle to raise oil output in Oct, easing supply cuts

Key alliance members said they expect to approve adding about 137,000 barrels during a video call on Sunday, as the group led by Saudi Arabia and Russia begins unwinding next layer of halted supplies

By Grant Smith, Nayla Razzouk, Fiona MacDonald and Ben Bartenstein

 

Opec+ has agreed in principle to increase production again next month, according to delegates, as the group doubles down on its policy shift to pursue market share instead of defending prices.

 

Key alliance members said they expect to approve adding about 137,000 barrels during a video call on Sunday, as the group led by Saudi Arabia and Russia begins unwinding the next layer of halted supplies, having just completed the surprise fast-tracking of a previous tranche. An October increase will start the return of 1.66 million barrels a day of cuts that were scheduled to remain in place until the end of 2026. Some of the delegates added that discussions are ongoing. 

 

The latest increase would cement a dramatic pivot by the Organization of the Petroleum Exporting Countries and its partners. The group stunned oil markets in recent months by reviving 2.2 million barrels of halted production a full year ahead of schedule in a bid to reclaim market share — and despite widespread expectations of an impending surplus. 

 

Crude prices have retreated 12% this year, pressured by increased supply from Opec+ countries and elsewhere, and as US President Donald Trump’s trade war weighs on demand. Yet the market has overall proven surprisingly resilient to the alliance’s strategy shift, giving Saudi Arabia and its allies added confidence to return even more barrels. 

 

A further acceleration of production increases is likely to please Trump, who has repeatedly called for lower oil prices to help tame inflation and as a means to pressure Russia to end its war against Ukraine. Saudi Arabia’s Crown Prince Mohammed bin Salman is set to visit Washington in November to meet the US president.

 

If Opec+ keeps returning about 137,000 barrels a month, it would be on pace to unwind the full 1.66 million barrels within one year. 

 

However, the actual volume is likely to be lower than announced, as some members of the group face pressure to compensate for earlier oversupply and forgo their share of production hikes, while several countries lack spare capacity. 

 

The move will put increased pressure on member nations that rely on higher prices, especially those that can’t pump more. 

 

If ratified, the group’s decision to start unwinding its next layer of cuts also reflects a tension that has dominated oil markets for months: forecasters are issuing mounting warnings about a looming supply surplus, and yet markets have remained relatively tight over the northern hemisphere summer. 

 

For global oil markets in the longer term, the Opec+ move serves to erode a longstanding safety net of idle production that could be brought back to cushion unforeseen supply shocks. 

 

And Sunday’s decision would represent yet another unexpected twist by Saudi Energy Minister Prince Abdulaziz bin Salman, who has established a history of springing surprises in order to wrong-foot speculators.

 

At the start of the week, the majority of crude traders and analysts surveyed by Bloomberg News predicted that the eight key Opec+ nations would hold production steady at Sunday’s gathering, before reports emerged that the group would consider an increase. 

 

After the previous meeting, delegates signaled that the next move could be one of several options, including pausing, increasing or even reversing the hikes.