OPEC+ to Increase Output by 548,000 Barrels a Day in August. What it Means for Oil Markets.

(JOE KLAMAR/AFP via Getty Images)

The Organization of the Petroleum Exporting Countries and its allies, or OPEC+, said that it has agreed to raise oil output by 548,000 barrels a day in August on Saturday.

The announcement came after the group’s first meeting since the Iran-Israel conflict in June and the U.S.’s strikes on Iranian nuclear facilities that same month.

OPEC+, which includes Iraq, Saudi Arabia and Russia, cited “steady global economic outlook and current healthy market fundamentals” for the larger-than-expected hike on Saturday. OPEC+ members will meet on Aug. 3 to decide on September production levels.

The planned uptick in production marks a significant jump: OPEC+ increased supply by 411,000 barrels a day in May, June, and July. Another 411,000 hike was widely expected for August.

The ramp-up next month could hurt oil markets, which now need to see demand quickly ramp up to match a larger supply of oil. Prices of Brent crude, the global benchmark, are already down 8.5% this year to $68.51 per barrel.

Analysts expect OPEC+ to keep its foot on the pedal. “With the mood that OPEC+ have been in since its pivot in April, we expect them to continue to raise production quotas by [about 400,000 barrels per day] each month,” wrote Kieran Tompkins, a climate and commodities economist at Capital Economics on Friday. He expects Brent crude prices fall to $60 by end of 2025. Bank of America listed a target of $64 for the second half of 2025 last week.

Oil prices have erased gains spurred by the recent conflict between Iran and Israel that also saw U.S involvement. Prices were near $80 by June 19, as investors worried about potential disruptions impacting the Strait of Hormuz, a waterway near Iran through which 30% of the world’s seaborne oil trade flows.

OPEC+ made sizable cuts in 2022 and 2023 to support prices, but as the group faces competition from non-OPEC+ producers—such as the U.S., which is lobbying for lower oil prices to restrain inflation—the collective may be looking to increase market share.

“This surge in production appears to reflect a deliberate shift in strategy: producers, notably Saudi Arabia and Russia, are increasingly prioritizing market share and revenue through volume, rather than price,” wrote Daniela Sabin Hathorn, senior market analyst at Capital.com in early June.

Write to Karishma Vanjani at karishma.vanjani@dowjones.com