RPT-COLUMN-OPEC+ output hike boosts Saudi market share and political capital: Bousso

By Ron Bousso

LONDON, Sept 8 (Reuters) - OPEC+’s surprise announcement that it will further accelerate oil production may seem like a threat to an already oversupplied market, but the actual market impact is likely to be limited.

The same cannot be said of the political benefits for the group's leader Saudi Arabia, which is seeking to reassert group discipline while expanding its market share and solidifying its relationship with the United States.

The Organization of the Petroleum Exporting Countries plus Russia and other allies, the group collectively known as OPEC+, agreed on Sunday to begin unwinding 1.65 million barrels per day of production cuts that were set to remain in place until the end of 2026.

The group of eight core OPEC+ members said it will raise its oil output target by 137,000 bpd in October.

At this pace, it will take the group 12 months to remove the full tranche of 1.65 million bpd of cuts, leaving the alliance with another 2 million bpd of production cuts still in place until the end of 2026. OPEC+ said it retained options to accelerate, pause or reverse hikes at future meetings. It scheduled the next meeting of the eight countries for October 5.

The group had already raised production quotas by about 2.5 million bpd, around 2.4% of global demand, between April and September. This put downward pressure on oil prices, which have declined by about 18% from their 2025 high in mid-January to $67 a barrel.

The new additions seemingly come at the worst possible moment for the market, which is widely expected to have already entered an extended period of oversupply due to production increases in Argentina, Canada, the United States and elsewhere.

The International Energy Agency previously forecast that supply would outstrip demand by an average of 3 million bpd between October 2025 and the end of 2026 – and that was before Sunday’s announcement.

DISCIPLINE

In theory, adding more barrels in this environment should weigh heavily on oil prices.

In practice, however, the impact may be muted.

An analysis of OPEC+ production suggests the actual additions are likely to be far more modest than advertised, as most members are already producing at or near full capacity.

In March 2025, just before the group began unwinding its first layer of cuts, joint production reached 31.83 million bpd, only 1 million bpd below its 32.88 million bpd production target for September, according to IEA figures.

That was largely because several OPEC+ members, notably Kazakhstan, the United Arab Emirates and Iraq, had already far exceeded their OPEC+ production quotas. In July, that trio jointly outpaced their September quotas by some 500,000 bpd.

The new quotas are therefore not actually going to add many additional barrels to the market because, for the most part, these guidelines are simply catching up with the reality on the ground.

For Saudi Arabia, however, the changes are significant. The Kingdom’s output is set to increase from 9.07 million bpd in March to 9.98 million in September. This will leave it with around 2.2 million bpd of spare capacity, according to IEA estimates, far more than any other OPEC+ member.

Under the tranche of cuts that are now being unwound, Saudi Arabia and Russia each reduced output by roughly 500,000 bpd. But Russia has little, if any, spare capacity, given that strict Western sanctions have limited investments in new production.

Saudi Arabia therefore stands to benefit the most from this rollback, with Riyadh well positioned to capture more market share, in particular from U.S. shale firms that will need to slow down drilling activity in the face of lower oil prices.

TRUMP CARD

Saudi Energy Minister Prince Abdulaziz bin Salman, the architect of the original OPEC+ supply cuts, now appears to be firmly back in the driver's seat after spending years battling the group’s breakdown in internal discipline.

And, importantly, this new move gives Riyadh the ability to garner valuable political capital, as U.S. President Donald Trump has urged OPEC to lower oil prices. The Saudis can now show that they are trying to do just that.

The Saudis therefore appear willing to withstand an environment of low oil prices for an extended period of time both to make long-term gains in market share and to support its relationship with its key ally.

Indeed, Saudi Crown Prince Mohammed bin Salman is reportedly scheduled to visit Washington, D.C., in November. This follows Trump's visit to the Gulf nation in May when Riyadh pledged to invest $600 billion in the United States while Washington agreed to sell Saudi Arabia an arms package worth $142 billion. It's safe to say that supply cuts and crude prices will be on the agenda for the new meeting in November.

OPEC+’s new production targets are therefore unlikely to significantly disrupt the oil market – and thus probably will not massively shift prices – but they could still have long-term consequences because of the geopolitical backdrop.

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