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- ES #145: OPEC8+ Surprises
ES #145: OPEC8+ Surprises
The eight members of the OPEC+ ‘voluntary cut crew’ (OPEC8+) announced a 548 kb/d production hike for August this weekend, surpassing the market’s expectations for a fourth consecutive 411 kb/d M/M increase in the OPEC8+ August quota.
Energy Shots #145
The eight members of the OPEC+ ‘voluntary cut crew’ (OPEC8+) announced a 548 kb/d production hike for August this weekend, surpassing the market’s expectations for a fourth consecutive 411 kb/d M/M increase in the OPEC8+ August quota.
In view of a steady global economic outlook and current healthy market fundamentals, as reflected in the low oil inventories, and in accordance with the decision agreed upon on 5 December 2024 to start a gradual and flexible return of the 2.2 million barrels per day voluntary adjustments starting from 1 April 2025, the eight participating countries will implement a production adjustment of 548 thousand barrels per day in August 2025 from July 2025 required production level.
This weekend’s decision raises the voluntary cut group’s YTD announced hikes to 1.92 MMb/d—in line with OPEC8+ production levels planned for May 2026 in the group’s original 2025 schedule.
Including pledged compensation from persistent overproducers like Kazakhstan and Iraq, the YTD change in announced OPEC8+ output drops to 1.42 MMb/d. Considering preliminary data that showed Kazakh output returned to record highs in June, however, the market is likely to remain dubious that these compensation cuts will arrive.
As shown below, combined OPEC8+ output (including pledged compensation) is now scheduled to increase to 31.83 MMb/d in August, led by an 800 kb/d increase in Saudi production quotas since March.
What it means for the 2025 supply/demand balance
Using OPEC’s own figures from the June MOMR (for May’s data), total non-DoC liquids output averaged 53.9 MMb/d in 1Q25 and is forecast to average 54 MMb/d in 2Q25 before falling to 53.9 MMb/d in 3Q25.
Total OPEC+ liquids production averaged approximately 49.3 MMb/d in 1Q25. Including the latest OPEC8+ hikes, total OPEC+ liquids production is forecast to average approximately 50.0 MMb/d in 2Q25 before gaining to 50.9 MMb/d in 3Q25.
Meanwhile, OPEC’s June MOMR forecasted global liquids demand at 104.4 MMb/d in 1Q25 (deficit: -1.1 MMb/d), 104.4 MMb/d in 2Q25, 105.5 MMb/d in 3Q25, and 106.4 MMb/d in 4Q25.
Assuming nominal growth in non-OPEC8+ production through 3Q25, consecutive OPEC8+ hikes and consistent Kazakh overproduction would still leave the market 200 kb/d undersupplied in 2Q25 and 800 kb/d undersupplied in 3Q25.
Still, discrepancies between announced hikes and actualized production growth are likely to continue into 2H25, placing more importance on trends in observable global inventories.
