OPEC+ has approved another increase in oil production for September, bringing an end to the group’s plan to gradually restore the voluntary production cuts it had announced in 2023.
The group will raise output by around 188,000 barrels per day (bpd) in September. The decision, confirmed on Sunday, completes the rollback of a voluntary cut of 1.65 million bpd.
The increase comes after several months of gradual production hikes. However, the full amount of oil from earlier increases did not always reach the global market. Disruptions linked to the war in the Gulf, as well as problems in Russia and Kazakhstan, affected actual export flows.
The September increase was approved by the core OPEC+ producers, including Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman. These countries have been taking the lead in the group’s monthly production decisions since the United Arab Emirates left OPEC in May.
What happens after September?
Interestingly, the latest OPEC+ statement did not say what the group plans to do in the fourth quarter. There had earlier been indications from OPEC+ sources that the group could pause production increases after completing the rollback of the voluntary cuts.
Speaking to Reuters, Jorge Leon, an analyst at Rystad Energy, said a pause is still the most likely outcome.
“OPEC+ has finished unwinding its voluntary cuts. The next challenge is managing the surplus that could emerge as export flows normalise,” he said.
Leon added that the group now has “little incentive to rush into further supply changes” as it shifts its attention towards talks on production quotas for 2027.
This means the focus could now move from increasing supply to deciding how much each member should be allowed to produce next year. The seven core OPEC+ members are scheduled to meet again on September 6 to decide the next steps.
OPEC+ still has another major cut in place
The September increase does not mean all OPEC+ production cuts have been removed.
The group is still keeping a separate cut of around 2 million bpd in place. This reduction dates back to 2022 and is expected to remain in force for most members until the end of this year.
At the same time, OPEC+ is carrying out a review of the production capacity of its members. The findings will be used to decide the baseline production levels for countries when new quotas for 2027 are set.
That process could lead to disagreements within the group. Iraq, for example, is pushing for a larger production allocation because it says its production capacity has increased.
Why the move matters for India
For India, the September production increase could bring some relief.
India is the world’s third-largest oil consumer and depends on imports for more than 85% of its crude oil needs. This makes the country particularly sensitive to changes in international oil prices.
More oil entering the global market could help keep crude prices under control, especially as analysts are already warning about the possibility of a surplus.
If prices remain lower, India could spend less on crude imports. That would reduce pressure on the country’s import bill and could also help the current account deficit. A lower oil bill could also provide some support to the rupee, which has faced pressure at times when energy prices have risen sharply.
On the other hand, if crude prices stay softer, oil marketing companies may find it easier to keep domestic petrol and diesel prices stable, even when global markets remain volatile.
That could provide some relief to consumers. Cheaper or more stable fuel prices can also help businesses and industries where transportation and other input costs are closely linked to oil prices. For India, therefore, a period of relatively lower crude prices could help keep inflationary pressure under control.
The OPEC+ move could give India more bargaining power as a major oil buyer. With little chance of further supply cuts soon, India may have more room to negotiate better crude prices. This could especially help New Delhi as it continues to buy discounted Russian oil.
Iran conflict remains a major risk
OPEC’s Joint Ministerial Monitoring Committee, a separate body within the organisation, also met over the weekend.
The committee again raised concerns about attacks on energy infrastructure linked to the ongoing US-Israeli conflict with Iran.
It warned that repairing damaged energy facilities can be expensive and can take a long time. Any prolonged damage could have an impact on global oil supplies.
This remains one of the biggest uncertainties for the oil market even as OPEC+ increases production.