Saudi Arabia Defies OPEC+ Quotas with Increased Oil Production

Saudi Arabia's crude oil production jumped by 700,000 barrels per day to 9.8 million barrels per day in June, surpassing its OPEC+ target. This increase comes as Saudi Arabia's exports soared by 500,000 barrels per day, with refinery runs also increasing by 300,000 barrels per day. Official Saudi production figures, to be released Tuesday, are expected to show near-perfect compliance with the kingdom's target, but traders are skeptical of this claim.

Eight OPEC+ nations have agreed to increase their crude oil production by 548,000 barrels per day starting in August. This decision comes amidst a strong global economic outlook and healthy market fundamentals, as reflected in low oil inventories. The increase represents half of a percent of the worldwide production.

The nations that voted to increase the output are Saudi Arabia, Algeria, Iraq, Kuwait, and the United Arab Emirates. Russia, Kazakhstan, and Oman also joined these nations in boosting production. OPEC nations that did not vote to increase output include Iran, Venezuela, Congo, Equatorial Guinea, Gabon, Libya, and Nigeria.

Saudi Arabia, the largest oil producer among OPEC+ members, is expected to increase its production to 9.8 million barrels per day in August. Russia, the second-largest producer, is expected to produce 9.3 million barrels per day. Iraq, the third-largest producer, is expected to produce 4.1 million barrels per day. The United States, which is not a member of OPEC, produced an average of 13.4 million barrels of crude oil a day in August 2024.

The increase in production comes as supply is expected to outpace demand by 1.25 million barrels a day in the second half of this year, according to Global Commodity Insights. This decision to ramp up supply reflects confidence in sustained summer demand for oil and refined products, with refining margins currently robust.

However, analysts warn that the faster-than-expected production increases could contribute to an oversupplied market later this year. Wall Street firms including JPMorgan Chase and Goldman Sachs forecast oil prices could dip near $60 per barrel in the fourth quarter amid easing consumption and rising inventories.

The Saudis have been seeking to boost production to please U.S. President Donald Trump, who has fostered a strong relationship with Saudi Arabia and the UAE. On Friday, August West Texas Intermediate oil futures settled at $68.30 per barrel, a decline of 50 cents. It dropped to $57.13 on May 13, which was the lowest since January 2021. The price rose to $80.04 on Jan. 15 and hit $120.67 in June 2022.

Saudi Arabia has announced an increase in the price of its flagship crude grade, Arab Light, for Asian buyers next month. The price adjustment comes just a day after OPEC+ members agreed to a substantial output increase. The price of Arab Light will be raised by $1 per barrel, setting it at $2.20 above the regional benchmark for Asian customers.

The eight OPEC+ countries will next meet on Aug. 3 to decide on September production levels. The Saudis have been seeking to boost production to please U.S. President Donald Trump, who has fostered a strong relationship with Saudi Arabia and the UAE.

The Saudis have steered the Organization of the Petroleum Exporting Countries to revive production faster than scheduled over the past few months. The kingdom raised crude production by roughly 700,000 barrels a day to 9.8 million barrels a day in June, with about 70% of the additional supply exported.

References:
[1] https://www.upi.com/Top_News/World-News/2025/07/05/8-OPECnation-to-boost-crude-oil-production/6461751726146/
[2] https://caliber.az/en/post/saudi-arabia-raises-oil-prices-for-asia-amid-opec-output-hike
[3] https://www.bloomberg.com/news/articles/2025-07-11/saudis-surged-oil-output-far-above-opec-quota-in-june-iea-says