Opec+ decision to raise production a ‘calculated risk’

MUSCAT, JULY 5

A leading Omani energy expert has described Opec+’s decision to raise oil production by 548,000 barrels per day (bpd) starting August as a “calculated risk” based on encouraging market signals.

The move, announced on Saturday, July 5, following a virtual meeting of eight oil producing nations of the Opec+ alliance, came as a surprise to analysts who had anticipated a more modest increase of 411,000 bpd. The so-called ‘G8’ group—comprising Oman, Russia, Saudi Arabia, Algeria, Iraq, Kazakhstan, Kuwait, and the UAE—has been gradually unwinding a series of voluntary production cuts aimed at stabilizing the market.

In a statement, the Opec Secretariat cited a “steady global economic outlook and healthy market fundamentals, reflected in low oil inventories,” as justification for the higher-than-expected production increase.

The Opec+ alliance is currently implementing two distinct voluntary production cuts outside the formal Opec+ framework: One involving 1.66 million bpd, in place until the end of 2025, and another 2.2 million bpd reduction, effective through Q1 of this year

Commenting on Saturday’s decision, Ali al Riyami, an energy analyst and former senior official at Oman’s Ministry of Energy and Minerals, said the move reflects a deliberate strategy rather than a gamble.

“This adjustment is notably larger than previous hikes, raising a critical question: is Opec taking an uncalculated risk, or is this a measured gamble?” said Al Riyami. “In my view, it’s a calculated risk backed by several supportive market signals. Seasonal summer demand is typically strong, and the easing of US–China trade tensions, along with dollar weakness, could help sustain global oil demand.”

He added that the timing of the announcement aligns with Opec+’s broader strategy to gradually unwind voluntary cuts ahead of Q4, when a significant supply surplus is expected, possibly extending into early next year.

“Ultimately, the hope is that the market will interpret this move constructively and that oil prices won’t come under pressure come Monday,” Al Riyami noted in a social media post.

Initially, the Opec+ group had committed to raising output by 137,000 bpd each month through September 2026. However, this pace was only sustained in April. In the following months—May, June, and July—production was ramped up by 411,000 bpd, with the new 548,000 bpd increase marking a further acceleration in August.