The Organization of the Petroleum Exporting Countries (OPEC+) bloc of oil-exporting countries has been flooding the market with barrels in recent months. The group announced another output hike for September earlier this month, with eight countries surging production by 547,000 barrels per day.
The bloc first began increasing production for April by 138,000 barrels per day, which then surged to 411,000 for May, June, and July, and 548,000 for August.
These hikes have now entirely reversed the cuts the bloc agreed to two years ago, and were partly driven by higher oil production outside OPEC+. However, this boost in output could have a smaller effect than expected on global oil prices.
Unwinding the cuts
The OPEC+ alliance has been seeking to reverse a series of previous output cuts. In November 2023, countries like Saudi Arabia, Russia, and the United Arab Emirates agreed to lower their output by a total of 2.2 million barrels per day in a bid to raise prices.
The move was “aimed at supporting the stability and balance of oil markets”, OPEC wrote at the time.
While these cuts were initially set to last until the end of 2023, they were later extended until December 2026 amid high output levels in other oil-producing nations. Prices also failed to rise as planned, with Chinese oil demand faltering due to the country’s economic downturn and an increase in electric vehicles.
OPEC+ then agreed in December to begin unwinding these cuts from April.
With the September production surge, this set of cuts has now been fully reversed. However, the bloc also has two further cuts of 1.65 million barrels per day from eight of its members and 2 million barrels per day across all members. These are currently set to expire in 2026.
While global growth in oil demand has flagged this year, OPEC has revised its 2026 demand forecast up by 100,000 barrels per day.
“World oil demand growth is forecast to increase by 700 kb/d in 2025, its lowest rate since 2009, with the exception of the 2020 Covid year,” according to the International Energy Agency last month. OPEC now projects growth of 1.38 million barrels per day in 2026.
Why is OPEC+ surging its output?
With the cuts in effect, OPEC+ began to lose market share to rising production in countries like the United States.
The U.S. is set to reach a new oil production record of around 13.6 million barrels per day this year, according to the country’s Energy Information Administration (EIA). U.S. oil production is currently expected to peak in 2027.
U.S. President Donald Trump has repeatedly called for a further increase in domestic oil to maintain lower prices, though the number of active U.S. oil and gas rigs has fallen by 49 since August 2024. “To the Department of Energy: DRILL, BABY, DRILL!!!,” Trump wrote on Truth Social in June, after oil prices briefly spiked following U.S. airstrikes on Iran.
Trump’s pressure on OPEC+ to surge output also likely impacted the bloc’s decision, according to analysts. In March, Barclays analyst Amarpreet Singh wrote that the month’s OPEC+ production hike “does not seem to be in response to stronger-than-expected demand for their barrels, but rather in response to increasing political pressure, especially from the Trump administration”.
Individual OPEC+ countries have also exceeded the bloc’s quotas in recent months, another incentive for the bloc to raise output. Kazakhstan’s production surged by 11.6% year-over-year in the first half of 2025, partly due to the expansion of its Tengiz oilfield.
In July, Kazakhstan’s energy minister said the country was exporting 1.64 million barrels per day, well above that month’s OPEC+ quota of 1.514 million barrels per day. Kazakhstan does not plan to leave OPEC+, its government said at the time.
What effect could these hikes have?
Despite the massive increase in oil supply in 2025, prices have not fallen dramatically, as other economic pressures continue.
In July, the EIA raised its crude oil price forecast for 2025’s second half. This was partly due to concerns that conflict between the U.S. and Iran could lead to the Strait of Hormuz being closed.
“The potential for higher oil prices over the second half of this year reflects the importance of the Strait of Hormuz to global oil supply. An estimated 20% of global petroleum consumption is shipped through the Strait of Hormuz, and concerns among market participants about its potential closure caused a spike in oil prices and volatility,” wrote the EIA.
JPMorgan global commodities strategy head Natasha Kaneva has projected a volatility spike in September, as United Nations Security Council sanctions on Iran are set to reactivate if no nuclear deal with the U.S. is reached.
Europe and Canada’s new lowered price cap on Russian oil will also take effect in September. U.S. sanctions on countries purchasing Russian oil could begin, with Trump this month threatening to “substantially raise” tariffs on Indian imports due to their buying oil from Russia.
Additionally, oil inventories outside China have been particularly low in recent months, adding further downward pressure on prices.
Lastly, supply may contract if OPEC+ ends its monthly output hikes. At the bloc’s next meeting on 7 September, it could discuss reinstating an output cut of around 1.65 million barrels per day, Reuters reported.
