Oil prices are relatively stable on Monday, despite the OPEC+'s unexpected announcement of a larger-than-expected increase in production starting in August.
At a meeting on Saturday, members of the Organization of Petroleum Exporting Countries and their allies, known as OPEC+, agreed to increase production by 548,000 barrels per day in August. This decision significantly exceeds previous monthly increases, which were limited to 411,000 barrels for May, June, and July, and 138,000 barrels in April.
According to RBC Capital analysts led by Helima Croft, this measure would bring back nearly 80% of the voluntary cuts of 2.2 million barrels per day decided by eight OPEC members on the market. However, they point out that, so far, the actual increase in production has fallen short of expectations, with Saudi Arabia accounting for most of the additional supply.
Nevertheless, Goldman Sachs analysts anticipate a further increase in production of around 550,000 barrels per day, which should be formalized at the next meeting, scheduled for August 3. If an increase of this magnitude is confirmed, the various production increases since April would exceed the 2.2 million barrels per day of voluntary cuts. All this in a market where fears about demand remain.
Indeed, Donald Trump's tariffs are raising fears of a global economic slowdown. The exact scale of these tariffs is still unknown. The US president said on Sunday that several trade agreements should be finalized in the coming days and that the US's trading partners would be informed by July 9 of the tariff increases, which are scheduled to take effect on August 1.
The increase in OPEC+ production therefore confirms the cartel's change in strategy. In recent years, the aim has been to maintain a high price per barrel (hence the production cuts). Now, the aim is to regain market share from non-OPEC countries.
The United States is particularly in the firing line. Since the early 2010s, US production has risen sharply thanks to the boom in shale oil, from 5 million barrels per day in 2010 to 13.5 mbd in 2024. The United States is currently the world's largest producer. In 10 years, its market share has risen from 15% to 22%.
However, this status could be under threat. US producers have higher production costs than those in the Gulf, for example. The Dallas Fed estimates that the price per barrel needed to launch new drilling is $65. Current price levels therefore threaten investment. Already, data from Baker Hughes shows that the number of active drilling rigs in the US has been falling for ten consecutive weeks. This should reinforce OPEC+'s strategy.
