Alex Lawler, Olesya Astakhova and Ahmad Ghaddar
3 min read
By Alex Lawler, Olesya Astakhova and Ahmad Ghaddar
LONDON/MOSCOW (Reuters) -The world’s largest group of oil producers, OPEC+, stuck to its guns on Saturday with another big increase of 411,000 barrels per day for July as it looks to wrestle back market share and punish over-producers.
Having spent years curbing production - more than 5 million barrels a day (bpd) or 5% of world demand - eight OPEC+ countries made an modest output increase in April before tripling it for May, June and now July.
They are spurring production despite the extra supply weighing on crude prices as group leaders Saudi Arabia and Russia seek to win back market share as well as punish over-producing allies such as Iraq and Kazakhstan.
"Today’s decision only goes to show that market share is on top of the agenda. If price will not get you the revenues you want, they are hoping that volume will," said analyst Harry Tchilinguirian of Onyx Captal Group.The eight countries held an online meeting on Saturday to set July production. The also discussed other options, an OPEC+ delegate said. On Friday, sources familiar with OPEC+ talks had said they could discuss an even larger hike.
In a statement OPEC+ cited a "steady global economic outlook and current healthy market fundamentals, as reflected in the low oil inventories" as its reasoning for the July increase.
OPEC+ pumps about half of the world's oil and includes OPEC members and allies such as Russia.
Its increased supply is weighing on crude prices, squeezing all producers, but some more than others, including a key group of rivals - U.S. shale producers, analysts say.
"Three strikes from OPEC+, and none were softballs. May warned, June confirmed, and July fires a shot across the bow," said Jorge Leon, head of geopolitical analysis at Rystad and a former OPEC official.
Since April, the OPEC+ eight have now made or announced increases totalling 1.37 million bpd, or 62% of the 2.2 million bpd they aim to add back to the market.
Higher summer oil demand favours increasing output at this time, OPEC+ officials including Russian Deputy Prime Minister Alexander Novak have said.
"The oil market remains tight indicating it can absorb additional barrels, as the effective increase should be smaller as several of the eight countries are overproducing, and demand is seasonally rising," said Giovanni Staunovo, analyst at UBS.
Algeria was among a small number of nations that requested a pause in the output hikes on Saturday, a source familiar with the matter said.
Oil prices fell to a four-year low in April, slipping below $60 per barrel after OPEC+ said it was tripling its output hike in May and as U.S. President Donald Trump's tariffs raised concerns about global economic weakness. Prices closed just below $63 on Friday.
