The Saudi-led Opec+ cartel has increased oil production for the second consecutive month, defying expectations of falling prices. Eight Opec members, including Saudi Arabia and Russia, added 411,000 barrels a day to their collective output in June, driven by Saudi Arabia’s efforts to push back against quotas.
The move marks a significant shift in strategy for Opec+, which had previously cut production by nearly 6mn b/d to boost prices. However, the effectiveness of this approach has waned amid weak demand, rising US oil production, and lax quota discipline among members.
Saudi officials are now comfortable with increasing supply, even if it means lower prices for the rest of the year. The kingdom is struggling to balance its national budget due to lower oil prices, but appears willing to prioritize market share over short-term gains.
Analysts question how much oil will actually reach the market, citing concerns from quota violators such as Kazakhstan and Iraq. Despite these doubts, Opec+ has signaled a new approach, one that prioritizes market share over price stabilization.
Source: https://www.ft.com/content/7e4a73da-f409-4d65-89cc-2528ebd35e56