Analysis: OPEC Eyes Market Share at Risk of Oil Price Drop

VIENNA (DTN) – After years of cutting production in an uphill battle against softening oil prices, the Organization of Petroleum Exporting Countries and its partners, colloquially known as OPEC+, is raising output to win market share.

The group, which has 22 member nations in all and controls more than 40% of global crude oil supply, pivoted to its new strategy in spring this year, citing strong oil demand as its justification.

This is despite the risk of lower oil prices that such an about-face could bring. A weak oil market has historically been an anathema to OPEC. Just this week, benchmark U.S. crude fell to a four-month low of $60.42 bbl.

The International Energy Agency, meanwhile, has a different outlook on oil supply. The IEA, which represents the interests of 31 oil-consuming countries, had already forecast a record oil glut for 2026 before OPEC’s shift in strategy became fully apparent.

On Sunday (10/5), eight of the largest oil producing nations in OPEC+ will be convening virtually to set production policy for November.

Market observers are anticipating a larger production quota hike than that set for October. While actual barrels added to the global market matter more than production targets on paper, OPEC’s oil output increases have over the past few months inched closer to meeting targeted volumes.

OPEC continued to ramp up output even after the group of eight had fully unwound a voluntary 2.2 million bpd production curtailment in addition to the existing OPEC+ framework.

According to last month’s OPEC oil market report based on secondary sources, combined crude oil production from the 22 member countries constituting OPEC+ jumped 509,000 bpd in August to 42.4 million bpd.

The group of eight itself raised output by 551,000 bpd month-on-month, meeting the 548,000-bpd target.

Other forecasting agencies like the IEA estimate de facto output increases to even have overshot their target.

Early data indicate that OPEC+’s production growth in September slowed compared to August. A Reuters survey pegged last month’s supply additions to 347,000 bpd, falling slightly short of the aimed increase of 415,000-bpd.

Extra compensatory cut obligations by some members who have overproduced in the past are likely to somewhat limit de facto supply hikes.

In addition, rapidly dwindling spare production capacity, while still sufficient for now, may in the future also exert a moderating effect.

Given the recent return of some 180,000 bpd of Iraqi crude oil to the market, the group’s production hike this month is likely to surpass the comparatively modest target of 137,000 bpd.

In September, the IEA once again raised oversupply expectations for this year and next, leading the agency to forecast global oil inventories to grow by an average of 2.5 million bpd in the second half of 2025.

This was prior to the comeback of Kurdish barrels and to the group of eight going beyond the initially aimed increase of 2.2 million bpd increase, both factors which are set to exacerbate oil inventory growth in the coming months.

A consensus of analyses suggests the oil market will likely be oversupplied through 2026 — bar major geopolitical escalations that could severely threaten global supply. The squeezes on supply could come from major sanctions crippling Russian flows, a closure of the Strait of Hormuz or a major war in the Arab Gulf that could cripple crude shipments out of the region.

As China slows oil purchases for its brimming strategic reserves, unneeded barrels are likely to show up in greater numbers in more data-transparent OECD markets like the U.S. and Europe.