Prices of crude oil decrease due to apprehensions over an increase in oil production by OPEC countries.
In a move that is set to significantly impact the global oil market, OPEC+ nations have announced plans to increase oil production by 411,000 barrels per day (kb/d) in July 2025, following a series of voluntary cuts implemented to support prices. This decision, which accelerates the easing of production cuts that began in April 2025 and will continue through September 2026, comes amidst a complex interplay of geopolitical and economic factors.
The participating countries, including Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman, have agreed to gradually reverse the 2.2 million bpd voluntary cuts over an 18-month period, aiming to adapt to market conditions and maintain stability.
This consistent production increase, combined with easing geopolitical tensions in the Middle East, such as the Iran-Israel ceasefire, has led to a reduction in the geopolitical risk premium that had previously supported higher oil prices.
However, the potential return of Iranian oil to the market, driven by comments from Donald Trump encouraging such a move and China's interest in Iranian supply, could further increase global supply. While the exact volume of Iranian oil anticipated to return is not yet clear, such an event usually adds downward pressure on prices.
The weak global economic outlook, including contracted manufacturing activity in China and slowed growth in the US and Eurozone, also contributes to lower prices by decreasing demand.
As a result, oil prices have dipped, with West Texas Intermediate (WTI) crude hovering around $65 per barrel, down from recent highs by about $12. The market is anticipating continued monthly supply increases by OPEC+ into August, which could result in oversupply and further price pressure.
In summary, the current trajectory suggests a likely softening or stabilization of oil prices around the mid-$60 range, unless unforeseen geopolitical tensions or demand shocks occur. The potential impact of Iranian oil on the market is not accounted for in the current production levels decision by OPEC+.
It is worth noting that Andy Lipow, the head of Lipow Oil Associates, has commented that OPEC+ may increase production by more than 400,000 bpd for August, and Barbara Lambrecht of Commerzbank has stated that several OPEC+ countries have exceeded their production quotas, which is considered one of the main reasons for Saudi Arabia's reluctance to continue bearing the burden of a production cut.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+) are expected to make a decision on production levels of member countries in the coming weeks. The potential return of Iranian oil to the market, driven by Donald Trump's statement about China buying Iranian oil, may contribute to an increase in the supply of oil in the market, putting further pressure on prices.
[1] Reuters, "OPEC+ to boost oil output by 411 kb/d in July, more than planned," 1 June 2025, [www.reuters.com](http://www.reuters.com) [2] AFP, "OPEC+ oil output increase puts pressure on prices," 3 June 2025, [www.afp.com](http://www.afp.com) [3] Bloomberg, "OPEC+ Agrees to Boost Output by 411,000 Barrels a Day in July," 1 June 2025, [www.bloomberg.com](http://www.bloomberg.com) [4] CNBC, "Oil prices fall as OPEC+ production increase looms," 5 June 2025, [www.cnbc.com](http://www.cnbc.com)
- The announcement by OPEC+ nations to increase oil production by 411,000 barrels per day in July 2025, as reported by Reuters, has deeply affected the oil-and-gas industry finance news, potentially creating a surplus that could impact global energy markets.
- Amidst the current geopolitical and economic factors, the decision by OPEC+ to boost oil production indicates a strategic shift in their approach to the industry, which finance analysts are closely watching for potential price fluctuations in the energy sector.
