The latest decision of the Organisation of Petroleum Exporting Countries and its allies, commonly known as Opec+, to boost output is being seen as an attempt to regain market share lost to the US, Brazil, and other oil producers, who have been increasing production recently.
The grouping had effected two voluntary production cuts in the past — first 1.66 million barrels per day (bpd), announced in April 2023, and the second of 2.2 million bpd with effect from November 2023.
Beginning April this year, Opec+ had been increasing production every month.
The latest September production increase fully reversed the 2.2 million bpd voluntary cut.
The latest Opec+ decision could drive benchmark Brent to trade below $65 per barrel (bbl), even tanking below $60/bbl by the end of December 2025, experts say.
Currently, Brent is trading in the range of $66-$68/bbl and crude oil could drop further as Opec+ decided to boost production from October despite waning demand.
The oil cartel, which accounts for around 40 per cent of world’s total crude oil production, announced on September 7 to increase the same by 137,000 bpd from October as it begins to unwind its 1.66 million bpd output cut.
“Opec increasing output is going to have a downward impact on prices. The oil market is over-supplied.
"There are economic headwinds at major economies with US President Donald Trump announcing tariffs.
"The US may also be staring at a recession. Big (oil) consumers are moving towards greener forms of energy, so demand is not really picking up.
"Amid these factors, crude oil prices are definitely going to decline from current levels,” said Prashant Vasisht, senior vice-president and co-group head, corporate ratings, Icra.
He added that Brent prices may fall below $65/bbl by the end of this year.
The decision to boost output from October is the beginning of the reversal of Opec+’s 1.66 million bpd cut, which was earlier set to remain in place until the end of 2026.
The output boost comes amid US' pressure on Opec to ramp up supplies to reduce domestic energy bills for American consumers.
“There is a possibility of crude oil prices being flattish or even declining from current levels.
"The broader idea of Opec is clear that it is looking at bigger market share than supporting oil prices.
"The demand estimates for 2025 and 2026 have also been toned down by the International Energy Agency (IEA) in its recent update due to tepid demand sentiments,” said Nitin Tiwari, vice-president at PhillipCapital.
Meanwhile, S&P Global has in a report said crude oil price may fall to around $55/bbl by the year-end as Opec continues to boost output.
The group increased output by 138,000 bpd in April, followed by an output boost of 411,000 bpd each month in May, June and July.
Taking it a notch higher, the cartel ramped up output significantly by 550,000 bpd in August and September each.
