Oil Traders Bet on OPEC+ Fourth Output Hike; Saudi Gamble Risks Fresh Volatility

TradingKey - According to recent developments in the oil market and trader forecasts, OPEC+ (the Organization of the Petroleum Exporting Countries and its allies) plans to significantly increase oil supply for the fourth time during its meeting scheduled for early July 2025.

Traders widely expect OPEC+ to approve a resolution to raise output by 411,000 barrels per day, with this increase set to take effect in August 2025. This will mark the fourth consecutive increase of the same magnitude following those in May, June, and July, bringing the cumulative recovery rate to three times that initially planned.

A survey of 32 traders and analysts revealed that 94% of respondents (30 persons) support the projection for an increase of 411,000 barrels per day, with only a few suggesting a smaller rise or remaining noncommittal.

Saudi Arabia aims to boost production for multiple reasons: on one hand, it seeks to reclaim market share lost to U.S. shale producers and other competitors while avoiding long-term idle capacity that could lead to revenue losses. On the other hand, it also serves as a means of disciplining violating member countries; previously, nations like Kazakhstan and Iraq consistently exceeded their production quotas. Increasing output can be used as a strategy to push down prices as a punishment for those violations.

Saudi Arabia is attempting to signal cooperation to the Trump administration in the U.S. by releasing capacity amidst ongoing pressure from Washington to lower energy prices. At the same time, advancements in ceasefire agreements within the Middle East have significantly alleviated supply disruption risks, creating favorable conditions for increased production.

If OPEC+ continues to increase production, the supply-demand balance is expected to further deteriorate, putting downward pressure on oil prices. Brent crude prices may fall below $60 per barrel (currently at $67 per barrel, down 9% year-to-date), which would also increase fiscal pressure on oil-producing countries and significantly reduce budget revenues for member states that rely heavily on oil income.

However, so far, actual increased production remains lower than committed levels. Although an increase of 411,000 barrels per day was planned over the past three months, actual growth in May was only 154,000 barrels per day due to quota shortfalls from countries like Iraq and Russia.