OPEC+ has announced an increase in oil production by 548,000 barrels per day for September. This decision follows earlier steps to accelerate the unwinding of production curbs, initially slated to take 18 months, but now completed ahead of schedule with the full 2.2 million barrels per day curb lifted.
The United Arab Emirates has received an increased production baseline, rising by 0.3 million barrels per day over the last six months. Meanwhile, in the United States, drilling rig counts have been declining, influenced by oil prices remaining below $70 and diminishing tier-1 inventory.
Opecs Holding Capacity
OPEC is still holding back 1.65 million barrels per day, with plans to reassess this before the end of the year. The Sept 7 meeting may offer more insights, which could impact oil prices further following a recent $2 drop.
With OPEC+ confirming a 548,000 barrel per day increase for September, we see immediate downward pressure on oil prices. This action completes the reversal of the 2.2 million barrel per day cuts that were first announced back in 2023. The market has now fully absorbed this expected supply increase, which contributed to the recent price weakness.
This bearish sentiment is amplified by fresh data. The latest Energy Information Administration (EIA) report for the week ending August 1, 2025, showed a surprise U.S. crude inventory build of 2.1 million barrels, against analyst expectations of a small draw. With WTI crude currently trading around $68, these inventory levels suggest that supply is outpacing immediate demand.
Focus For Traders
On the other hand, we are watching the slowdown in future U.S. production, which could create a bullish case later in the year. U.S. oil drilling rig counts have fallen to 495, down from over 550 at the start of 2025, as lower prices and depleted prime drilling locations curb activity. This decline suggests that non-OPEC supply growth will be limited in the months ahead.
The main focus for traders, however, should be on the upcoming September 7 OPEC+ meeting. The group is still holding back 1.65 million barrels per day, and any signal about releasing that supply will heavily influence the market. This uncertainty creates a high-volatility environment perfect for options strategies.
Historically, we have seen significant price swings around such pivotal meetings. We remember the sharp price volatility during the 2020 production cuts and the collapse in late 2014 when the group opted not to cut supply in the face of a glut. The current setup feels similar, where a decision to release more barrels could send prices tumbling further.
Given the immediate oversupply and future uncertainty, buying put options on crude futures for September or October expirations appears to be a logical strategy. This allows for profiting from a potential price drop leading into or following the next OPEC+ meeting, while defining your maximum risk. It is a direct way to position for the bearish pressure we are seeing today.
