OPEC+ to boost supply in October to regain market share

OPEC+ jolted oil markets over the weekend, confirming it will raise oil production by 137,000 b/d in October. 

OPEC+ has been ramping up oil production since April following years of reductions aimed at stabilizing the oil market. However, the decision made on Sunday, Sept. 7, to increase output further caught many off guard, given mounting concerns over oversupply.

The decision, though modest in headline volume, has reset market expectations by signaling a shift in strategy: defending market share now takes precedence over defending prices.

Strategy test, oil production cuts unwinding

Sunday’s agreement also means the eight OPEC+ members have begun unwinding their second tranche of oil production cuts of about 1.65 million b/d, more than a year ahead of schedule. OPEC+ has fully unwound its first 2.5 million b/d of cuts, or about 2.4% of global demand, since April.

The move is difficult to reconcile, said Walt Chancellor, an energy strategist at Macquarie Group, given what he sees as a looming oil glut in 2026 and already “meager global stock draws” across the third quarter. With US crude production hitting a record 13.6 million b/d in June and potential for further gains despite declining rig counts, Chancellor warned that OPEC+ may be setting the stage for a prolonged test of price resilience.

“Does OPEC want a price war...as a long-term strategy, we think not," Chancellor said, but tactically, "this latest move feels a bit like ‘chicken’ from a game theory perspective.

WIth current conditions coupled with non-OPEC growth, "perhaps OPEC has resolved to power ahead and not be the first to ‘swerve’ by pausing increases," he continued, noting as such, "the swerving along the oil supply path would be reserved for more price-sensitive producers, with particular focus on US shale," he continued.

"While we think OPEC may (again) ultimately learn that the price to stymie shale is unacceptably low, given the passage of time and structural changes to the industry, from OPEC's perspective, a more vigorous test of that supposition may be on order," Chancellor said. 

“For some, this announcement may be a non-event, with WTI already nearing $60/bbl and the expectation of precipitous shale declines below this threshold. We have maintained the level to shift US supply toward declines is more likely the $50-55 WTI range, given underlying producer economics," he said.

"As a real-time check-in on US supply, we note a record 13.6 million b/d of oil production in June, with implied supply from weekly balances suggesting further potential growth in subsequent months. Looking forward, while rig count declines have exceeded our expectations, we again note the potential for productivity gains to provide an offset," Chancellor noted.

"All told, while the potential for seasonal US declines to emerge in winter persists, sustainable declines may require a full step (or two) lower in crude prices. Absent substantial supply disruptions or an OPEC reversal, we see clear potential for WTI to move into the $50s (or below) as builds mount across late 2025 and early 2026," he said.

Rystad Energy chief economist Claudio Galimberti called the supply uptick modest in volume but powerful in signal.

"OPEC+ is playing offense, not defense," he said. Only Saudi Arabia, the UAE, and Iraq can materially raise output, but the optics of loosening taps matter more than the barrels themselves, Galimberti noted. By tolerating softer prices, Riyadh and its Gulf allies are sending a message that long-term market share is worth near-term revenue pain.

However, beneath the surface, fault lines within OPEC+ are widening. “For Russia, every extra dollar matters as crude revenues prop up its budget and offset sanctions-driven strain. Gulf producers, by contrast, are playing a longer game. Saudi Arabia and the UAE are betting that near-term revenue pain is worth locking in market share in the years ahead, particularly as global oil demand growth slows. For now, the Gulf camp is setting the script, and Moscow is playing along," Galimberti continued.

"At the same time, it is worth paying attention to the development in the Caribbean, where the US administration has been targeting vessels and will, in the future, potentially target aircraft from Venezuela when suspected of carrying drugs," he said. "A military confrontation between the two countries would be a significant source of geopolitical risk in the region and for the oil markets."