The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are weighing a potential third consecutive production hike as the group prepares for a critical decision on July quotas during its upcoming meetings scheduled for May 28 and June 1.
According to delegates familiar with internal discussions, the group is considering an additional 411,000 barrels per day (bpd) supply increase for July, mirroring the output hikes approved for May and June. If adopted, the move would represent a continued departure from OPEC+’s long-standing policy of defending oil prices through production cuts or freezes.
The proposal, which is still under negotiation, is expected to be finalised during an eight-nation video conference on June 1, with all 22 member countries participating in preliminary discussions beginning May 28.
Brent crude declined by 0.9% to $64.31 per barrel in London on Thursday as investors responded to the potential for higher supply, extending the downward pressure that has persisted since OPEC+ first announced back-to-back output increases earlier this year.
While the official rationale for the hikes has been framed as a response to rising global demand, market observers suggest multiple motivations are at play. These include efforts by Saudi Arabia to discipline overproducing members such as Kazakhstan and Iraq, reclaim market share, and respond to political pressure from the United States.
“Compliance by the over-producing countries has not changed much, and so far, the previous quota increases have been absorbed by the market,” said Martijn Rats, Global Oil Strategist at Morgan Stanley.
He added that a July hike of the same magnitude would align with current supply dynamics.
At the group’s last meeting, Saudi Arabia issued a firm warning to members exceeding their quotas, threatening further supply increases as a corrective measure.
Despite commitments to reduce excess volumes, Kazakhstan has made little progress in curbing exports by international oil companies operating within its jurisdiction.
Meanwhile, a Bloomberg survey of 32 market participants found that 25 analysts expect OPEC+ to approve another 411,000 bpd increase for July while a minority anticipate a return to more modest hikes of around 138,000 bpd.
The ongoing quota expansion coincides with a cautious global economic outlook. The International Energy Agency (IEA) last week revised its forecast, projecting a slowdown in global oil demand growth for the second half of 2025 amid macroeconomic headwinds.
In response, Goldman Sachs has forecast that the group may pause further increases beyond July, citing weakening fundamentals and the risk of oversupply.
“OPEC+ is at a strategic inflection point,” said Harry Tchilinguirian, Head of Oil Research at Onyx Commodities. “If there is indeed a shift in policy toward market share and away from price defence, it then makes sense to unwind quickly. It’s a little like a band-aid: you pull it off in one swoop.”
The June 1 meeting will provide clarity on whether the group will continue with its aggressive supply expansion strategy or adopt a more cautious stance in response to softening demand signals and fluctuating prices.
As global markets await the outcome, oil traders, refiners, and policymakers are recalibrating expectations around OPEC+’s production management and the broader implications for pricing, inventory levels, and geopolitical stability.
