Agreement Details
Eight OPEC+ countries—Russia, Saudi Arabia, UAE, Algeria, Iraq, Kazakhstan, Kuwait, and Oman—have preliminarily agreed to increase oil output in October by 137,000 barrels per day from the September level. This was stated in the official communication from the oil cartel.
The statement emphasizes, "Given the resilient outlook for the global economy and the current favorable market indicators, reflected in low oil inventories, the eight participating countries have decided to adjust production by 137,000 barrels per day from the 1.65 million barrels per day of additional voluntary adjustments announced in April 2023."
The cartel underscored that "the 1.65 million barrels per day can be returned partially or fully depending on changing market conditions, and progressively."
"The countries will continue to closely monitor and assess market conditions, and in their ongoing efforts to maintain market stability, they confirmed the importance of a cautious approach and maintaining full flexibility to suspend or cancel additional voluntary production adjustments," the statement read.
Russian Deputy Prime Minister Alexander Novak, commenting on the decision by OPEC+ member countries on the Russia 24 TV channel, noted that Russia would increase its production by 42,000 barrels per day.
"We are fulfilling our obligations in full. In terms of compensation and increasing volumes that were adopted in previous periods, this allows our oil industry to ensure production growth. This has a positive effect on our economy and the oil sector as a whole. Therefore, we will continue to make these decisions based on the necessity of maintaining the balance between demand and supply in the global market," he stated.
Saudi Arabia will also increase production by 42,000 barrels, Iraq by 17,000, UAE by 12,000, Kuwait by 11,000, Kazakhstan by 6,000, Algeria by 4,000, and Oman by 3,000 barrels per day.
According to Dmitry Kasatkin, managing partner at Kasatkin Consulting, the cartel expects improvements in the overall economic situation globally, particularly in the Asian region.
"Overall, the decision appears to be a consistent implementation of the strategy to increase OPEC's share in global oil markets. For Russia, this is positive in terms of reducing the volumes that need to be compensated for exceeding past quotas. It is important to note that OPEC retains flexibility, and in future meetings, if the monitoring results of demand/supply balance change, quotas may be adjusted. Overall, the decision can be characterized as a very cautious adjustment, translating to +0.4% of daily production for Russia," Kasatkin noted.
The cartel has stated that the eight OPEC+ countries will hold monthly meetings to review market conditions, compliance, and compensation. The next meeting is scheduled for October 5, 2025.
Reasons Behind the Decision
The OPEC+ decision was quite predictable, according to Valery Andrianov, an associate professor at the Financial University under the Government of the Russian Federation.
"The alliance is gradually increasing production despite a relatively unstable global market situation. Moreover, this decision appears to be practically the only right choice since, under current conditions, OPEC+'s influence on price dynamics is minimal, and oil supply from non-signatory players is growing."
Ekaterina Kosareva, managing partner of VMT Consulting, reminded that over the past 20 years, U.S. production has grown 3.5 times, transforming the country from the largest fuel importer in the world to a net exporter of oil and petroleum products.
"Currently, the U.S. satisfies more than a fifth of the demand for oil and petroleum products in Europe," Kosareva stated, pointing out that this situation may not be favorable for all oil producers, especially those reducing production to maintain prices for future investments.
Thus, Andrianov believes that at this stage, the main objective is to gradually increase production at a pace that, on one hand, does not lead to a sharp market collapse and, on the other hand, satisfies the appetites of the primary alliance participants while preventing external competitors from capturing additional market shares.
"It is clear that there will be dissatisfied parties. Countries with greater capabilities and prospects for production growth will advocate for a more active exit from restrictions, while countries lacking such opportunities are interested in maintaining relatively high prices," the interviewee remarked.
The CEO of Open Oil Market, Sergey Tereshin, agrees with this assessment. He highlights that the overall quota increase will not be substantial: only 137,000 barrels per day.
"This is the lowest increase in the last six months. Therefore, the latest decision will not destabilize the market," he believes.
As noted, at the previous meeting in August, the eight OPEC+ countries that were voluntarily reducing oil production decided to increase output in September by 547,000 barrels per day.
Implications for Oil Prices
Oil prices began to react to insider information regarding the upcoming increase before the weekend. If, as of Tuesday, Brent crude was priced at $69.14 per barrel amid skeptical investor sentiment regarding peace talks between Russia and Ukraine, by the close of trading on Friday, the price had fallen to $65.50. This information is based on data from the London ICE exchange.
This decline was prompted by news from Western news agencies regarding the outcome of the Sunday meeting among the eight OPEC+ member countries.
Bloomberg, citing its sources, reported that Russia, Saudi Arabia, the UAE, Algeria, Iraq, Kazakhstan, Kuwait, and Oman have preliminarily agreed to increase oil production in October by 137,000 barrels per day from the September level. One Reuters source claimed that the increase could amount to around 200-350,000 barrels per day.
The market immediately reacted to this potential increase with a drop in prices, and industry experts currently do not anticipate significant fluctuations in oil prices.
According to Valery Andrianov, the market situation has recently been sluggish in responding to OPEC+'s decisions—due to the predominance of other pricing factors and the absolute predictability of the alliance's actions.
"Prices might see a slight increase in the short term—as a reaction from trading automated systems to external signals. However, in the medium term, this influence is minimized, giving way to other, more significant factors, such as demand from major consumers and geopolitical tension levels."
Ekaterina Kosareva added that threats of more stringent sanctions against Russian oil or other friendly countries may curb further price declines.
By the end of the year, Brent prices are projected to remain below $70 per barrel, and next year they may decrease to $60 per barrel, believes Sergey Tereshin.
Source: Izvestia
