Oil: OPEC+ raises production in August amid US tariffs, global slowdown
OPEC+ agreed to a better-than-expected increase in monthly oil production by an additional 548,000 barrels per day for August, despite demand concerns stemming from a push for U.S. tariffs and a slowing global economy.
The move marks the fourth consecutive month in which the group of oil producers, led by Saudi Arabia and Russia, has increased output.
The latest monthly increase is a jump from 411,000 barrels in May , June and July, and traders had expected the same level for August.
The increase comes “in light of the stable global economic outlook and current healthy market fundamentals, as reflected in low oil inventories, and in accordance with the decision agreed on December 5, 2024 to initiate a gradual and flexible return to voluntary adjustments of 2.2 million barrels per day starting April 1, 2025,” OPEC said in a statement Saturday.
Iraqi oil wells
OPEC+ said the gradual increases could be paused or reversed based on evolving market conditions and that this flexibility would allow the group to continue “supporting oil market stability.”
The measure will allow the eight OPEC+ countries to “accelerate their compensation,” the statement said.
The group will meet again on August 3 to decide on production levels for September.
The OPEC+ decision comes despite oil prices remaining well below the highs reached in the early days of the 2022 war between Russia and Ukraine and, following the flare-up over the 12-day war between Iran and Israel, prices are returning to the lows of May 2025, as the following WTI chart shows.
Oil prices have started 2025 on a positive note. The closing price of Brent crude, the benchmark for two-thirds of the world’s oil, peaked at more than $82 a barrel on January 15, while West Texas Intermediate, the index that tracks U.S. crude, hit nearly $79 a barrel on the same day.
Concerns about demand, a slowing economy and lackluster growth in China, the world's largest oil importer, have weighed on oil prices in 2025.
U.S. President Donald Trump's push to impose heavy tariffs on trading partners this year has been the main factor behind the price decline.
His continued shifting stance on trade and tariff policies has increased volatility in a market already reeling from geopolitical concerns and wars in the Middle East, which have threatened to disrupt global supplies of crude from the region.
The latest bout of volatility was caused by the 12-day war between Israel and Iran: prices rose more than 13% in a week, but quickly fell back below pre-conflict levels.
Nuclear talks between the United States and Iran, which are expected to resume next week in Oslo, are fueling bearish market sentiment.
We know that White House envoy Steve Witkoff and Iranian Foreign Minister Abbas Araghchi will be present at the negotiations, hoping to reach an agreement that would clarify the political situation in the Middle East.
Uncertainty remains over U.S. tariff policies, with the end of the 90-day pause on tariff increases scheduled for July 9.
Washington was due to begin sending letters to countries on Friday specifying the tariff rates applicable to goods exported to the United States .
President Trump told reporters before leaving for Iowa on Thursday that the letters would be sent to 10 countries at a time, carrying tariffs of 20% to 30%, Reuters reported.
Several countries are still negotiating trade agreements with the United States.
Acceleration of production
The acceleration of crude’s return to the market began in March, when OPEC+ said it would proceed with a “gradual and flexible” reduction in voluntary production cuts of 2.2 million barrels per day, starting in April and increasing by 138,000 barrels per day per month through September 2026.
The return of production cuts, originally agreed by eight OPEC+ members including Saudi Arabia, Russia, the United Arab Emirates and Iraq in November 2023, had been postponed several times due to concerns about rising market supply.
However, analysts say the market has already priced in the latest increase and crude is unlikely to fall much below current levels.
Janiv Shah, vice president of oil markets at Rystad Energy, told The National that the market “is widely expecting OPEC+ to announce another month of accelerating cuts, as data shows a market that is deeply undercut for August due to peak demand and refinery activity, which would still be in deficit even after accounting for the extra barrels.”
“The OPEC+ rise has been largely priced in, as the market is trading in a narrow range due to declining risk premiums and geopolitical forces,” he added.
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The article Oil: OPEC+ increases production in August amid US tariffs and global slowdown comes from Scenari Economici .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/opec-plus-aumento-produzione-petrolio-agosto-prezzi-mercato/ on Sat, 05 Jul 2025 12:12:29 +0000.