There is never much oil: why the OPEC+ decision to increase production did not lead to a collapse in prices

Alexey Gromov, Principal Director on Energy studies at the Institute for Energy and Finance, commented to Forbes on the possible reasons for the global oil market restrained reaction on the OPEC+'s decision to accelerate the withdrawal from additional voluntary production restrictions.

According to him, on the one hand, OPEC+ is gradually lifting restrictions, and on the other hand, it insists that countries that exceed their commitments to reduce production compensate for them.

"There are two trends at work here, which are not mutually exclusive, but partially compensate for each other," the expert believes. — In this situation, the picture of June looks very clear, where OPEC+ agreed to increase production by 411,000 b/d, and in fact it is possible to estimate the increase in production by OPEC+ countries by only 270,000 b/d. In particular, Iraq did not actually increase production in June. Thus, two complementary trends have led to the fact that the real production of the OPEC+ countries is less than the declared one. And of course, the market sees that in fact, the recovery of production is not proceeding at the pace that the OPEC+ countries claim."

Another reason for the restrained market reaction is the weak dollar, Gromov says. "In the first six months of 2025, the dollar index (DXY) fell by 10% against the six major currencies that determine the dollar's position as the world's reserve currency," he notes.

"Since oil prices are quoted in dollars, the weak dollar, in addition to the insufficient real increase in oil production by the OPEC+ countries, did not allow world oil prices to react significantly to the alliance's latest decision. I assume that in the future, at least until autumn, there will be no significant collapse in oil prices," the expert adds.