Insights 
VT 
OPEC+ is set to increase oil production by 548,000 barrels per day in August, surpassing previous projections. Originally, the group had planned monthly increments of 411,000 barrels per day for May, June, and July.
The decision comes due to stable global economic conditions and healthy market fundamentals, characterised by low oil inventories. Media reports indicate that the OPEC+ coalition will reassess the 548,000-barrel increase for September at its upcoming meeting on August 3.
Market Share Focus
This output rise marks a change from years of controlled supply management. OPEC+ appears to be shifting focus towards gaining market share, a response to US shale drillers capturing some of their previous volumes.
In 2023, OPEC+ had announced a cut of 2.2 million barrels per day. The current increments of 411,000 barrels per day are part of reversing these reductions, with the 548,000 boost accelerating the process.
Despite this increase, OPEC+ retains 1.66 million barrels per day of idle capacity. However, there is a possibility that actual production may not reach the intended levels.
This latest announcement signals a deliberate effort to ease curbs at a quicker pace than was previously indicated. Instead of sticking with the more measured approach laid out earlier in the year, a more confident tone has emerged. It’s grounded in stronger-than-expected demand and a quieter-than-usual inventory profile across key storage hubs. That’s made it harder for prices to stay anchored in recent weeks, and supply-side developments are now trying to match the tone set by consumption trends.
Conditional Adjustments
The decision to reassess the increase in early August introduces a layer of conditionality. It’s not a signal of doubt, but it does reflect an awareness that short-term adjustments may be required. Flexibility, rather than a fixed trajectory, is being favoured for now. There is room here for misalignment if demand fails to keep up or swings in prices provoke political resistance in smaller producer states.
What’s more, the shift away from strict volume management appears to be aimed at keeping pace with alternate producers. Riyadh’s latest move isn’t occurring in isolation—it’s a counterbalance to the resilience seen in non-OPEC drilling activity. The fact that spare capacity remains sizeable, yet unutilised, shows that the buffer isn’t being sacrificed entirely. Instead, it’s being kept as a safeguard.
Traders should not assume that these incremental increases will flow smoothly into terminals. Historical behaviour suggests that actual deliveries can stall, especially in areas where infrastructure lags or output targets overrun technical capabilities. Anecdotal supply delays tend to emerge in the first half of a change like this—often unnoticed until physical markets register the difference.
With the forward curve still reflecting comfort at the front and some tightening later, we expect the prompt market to react more to visible draws than notional supply pledges. That dynamic has persisted for over a year now, and continues to guide options positioning. Moreover, daily realised volatility remains subdued, which could be misleading. Reversion to higher levels may be sparked by even modest deviations from promised flows.
Given how this sets up, fixed strike sell volumes further out are likely to remain tied to headline risk—particularly in light of the group’s next scheduled update. Still, we anticipate adjustments on the short-end as revisions to physical flows become more measurable.
Any sustained move won’t take root unless spot barrels begin to follow through. Until then, directionality remains biased to intraday whipsaws with eyes on inventory data. High-frequency signals may overreact during session opens, so entry points need to be judged carefully. Look for strength in the physical indicators first—especially exports and velocity at key hubs—before layering on broader exposures. Inter-month spreads may offer the cleaner opportunities if flows partially materialise.
