August

Introduction: The Oil Alliance Takes a Step Forward, but Prices Have Already Collapsed

Sunday. A video conference that changes the balance of power in the global oil market. Seven key OPEC+ participants, led by Saudi Arabia and Russia, agree on another increase in combined production quotas. In August, they will add another 188,000 barrels per day, continuing the gradual reversal of restrictions that have held back production in recent years.

At first glance, this is the kind of news that should have sent prices crashing. More oil on the market means lower prices. But oil futures have already fallen by 43% from their wartime peak, to around $72 per barrel in London. An additional 188,000 barrels per day is only 0.2% of global demand. It is not a drop in the ocean, but it is not a tsunami either.

What really matters in this decision is not so much the number itself, but the signal. OPEC+ is demonstrating that it does not intend to panic because of falling prices. It continues to follow its plan, even if the market is already oversupplied. And this creates a new context for the oil industry — a context in which the old rules of the game no longer work.

Let’s examine what really stands behind this decision, why OPEC+ continues to increase production despite falling prices, and what this means for the future of the oil market.

Figures and Context: What an Increase of 188,000 bpd Means

The Plan to Complete the Reversal of Restrictions

The decision to increase quotas by 188,000 barrels per day is not spontaneous. It is part of a plan that was developed even before the war and that OPEC+ has been consistently implementing. Since the beginning of the conflict, the alliance has increased quotas by 940,000 barrels per...