OPEC+ is expected to move forward with its plan to raise oil production quotas in July, despite a weak oil price environment. According to anonymous sources cited by Reuters, the group is sticking to its long-term strategy of gradually increasing output.
OPEC has repeatedly emphasized that its decisions are based on global supply and demand forecasts, not current oil prices. The alliance, made up of OPEC members and their allies, is set to meet on Wednesday to review policy. Three delegates confirmed that the group is not expected to change its previously announced plan: to steadily lift production quotas each month until COVID-era cuts are fully reversed.
However, analysts warn that quotas do not always translate into actual production. During the summer, domestic demand for oil rises in several member countries—particularly in the Middle East—due to increased use of air conditioning. Additionally, some countries may not be able to boost output due to operational or financial constraints.
Oil prices fell nearly 1% on Tuesday morning, reflecting market unease ahead of the OPEC+ meeting. As of 10:55 a.m. in New York, West Texas Intermediate (WTI) traded at $60.95 per barrel, while Brent crude stood at $64.17.
The production hike comes at a challenging time for U.S. shale producers. Rig counts in the U.S. have dropped steadily, including in the Permian Basin. Last week alone, the total number of active oil rigs fell by 10, bringing the count down to 465—the lowest since November 2021. Tightening cash flow and a continued focus on capital discipline have led many shale companies to slow drilling activity, especially as protective hedges expire and profits shrink.
Despite falling prices and rising inventories, OPEC+ is reluctant to change course. The group has spent months signaling its plan to unwind pandemic-era cuts and reversing now could damage its credibility.
Still, questions remain about whether members can meet higher quotas. Many nations are already producing below target levels due to technical issues or domestic pressures. For example, Saudi Arabia’s own summer energy demand may absorb much of its increased production before it reaches the global market.
For now, OPEC+ appears focused on showing unity and control, even as global oil supply and demand dynamics remain uncertain. But with inventories climbing and demand still unpredictable, market patience may be running out.
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