OPEC+ Pushes Production, But Delivery Lags.
OPEC+ has been aggressive in its efforts to reclaim market share, announcing a series of output increases that have caught analysts off guard. In July 2025, the group agreed to accelerate hikes, adding 548,000 barrels per day (bpd) for August, exceeding the anticipated 411,000 bpd.
This follows a combined 411,000 bpd boost for May and June 2025. The strategy appears driven by competition from non-OPEC producers like the U.S., Brazil, and Guyana, as well as internal pressures to offset rising domestic demand and aging infrastructure in key members.
June saw a modest 267,000 bpd increase among five OPEC members, but overall compliance issues persist, particularly in countries like Iraq, Kazakhstan, and Nigeria.
Analysts, including those at Morgan Stanley, estimate that the group’s spare capacity is limited, potentially capping further increases at around 420,000 bpd between June and September 2025.
This raises the question: Is OPEC+ maxed out? With Brent crude prices hovering between $61-65 per barrel in 2025—far below the $85-95 needed for fiscal balance in most member states—the push for volume over price could lead to heightened volatility.
The International Energy Agency (IEA) projects world oil supply to rise by 1.8 million bpd to 104.9 million bpd in 2025, with non-OPEC+ countries contributing 1.4 million bpd of that growth.
OPEC itself remains optimistic long-term, forecasting global demand to reach nearly 123 million bpd by 2050 in its World Oil Outlook 2025.
U.S. Output Holds Steady at Record Levels
This plateau follows a first-quarter average of 13.29 million bpd and a second-quarter dip to around 13.4 million bpd, influenced by operational efficiencies and market signals.
The U.S., a cornerstone of the tight oil market through its shale production, continues to churn out crude at near-record highs despite some downward revisions in forecasts. According to the U.S. Energy Information Administration (EIA), domestic crude oil production hit an all-time high of over 13.5 million bpd in the second quarter of 2025.
Despite the OPEC+ surge, U.S. producers have shrugged off the added supply, benefiting from low break-even costs in key basins like the Permian. The EIA anticipates a modest growth of 160,000 bpd in 2025 before stabilizing, underscoring the sector’s resilience amid global competition.
Global oil demand remains a critical factor in maintaining market tightness. The IEA has revised its 2025 demand growth forecast downward to just 700,000 bpd—the weakest since 2009 outside pandemic years—citing escalating trade tensions and slowing economic momentum, particularly in China.
In contrast, the EIA projects a more robust increase of 0.8 million bpd in liquid fuels consumption for 2025, rising to 1.1 million bpd in 2026, driven primarily by non-OECD countries.
OPEC has adjusted its longer-term outlook, lowering 2026 demand to 106.3 million bpd from 108 million bpd due to decelerating growth in China.
Current peak demand in the northern hemisphere, coupled with risks of diesel shortages from low refining margins and a harsh winter, has helped absorb the extra barrels without building significant inventories.
U.S. gasoline prices, at $3.03 per gallon—the lowest since May 2021—reflect consumer benefits from the supply dynamics, but underscore the delicate balance.
The key to understanding this non-impact lies in the physical market realities. Global inventories are depleted: OECD stocks are 97 million barrels below last year’s levels, U.S. Cushing inventories are at an 11-year low, and diesel stocks are 23% below the five-year average.
Oil prices have even risen in response to the surge, with Brent climbing from $68 to over $70 per barrel before settling with modest gains, defying expectations of a downturn.
As seasonal demand wanes later in the year, the balance could shift toward a surplus, potentially in the fourth quarter.
For now, however, the tight oil market—epitomized by U.S. shale—continues to shrug off the supply wave, supported by robust fundamentals and OPEC+’s underdelivery. Geopolitical tensions within the alliance and competition from efficient non-OPEC producers add layers of complexity. Still, the message is clear: the market needs these barrels, and perceptions of oversupply are overstated.
Charles Kennedy for Oilprice.com says: “Refiners, especially in the Midwest and along the Gulf Coast, are watching closely. The prospect of a near-term SPR draw or relaxed restrictions on sanctioned barrels could depress sour crude differentials, while stricter maritime tracking or fresh designations could send risk premiums higher.
Hedge funds have begun to reposition. CFTC data show speculative net longs in Brent and WTI rising modestly last week, reversing a two-week decline. That shift, however, remains cautious, reflecting uncertainty over the scope of the administration’s energy signal.
With gasoline demand still strong and diesel margins narrowing, traders say today’s remarks from President Trump may mark a policy inflection point. Until then, price action remains tightly tethered to D.C. instead of Riyadh.”
