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So, without further ado, let’s get started. There is nowhere better to start than with OPEC. The Organization of the Petroleum Exporting Countries plus Russia and other allies, the group collectively known as OPEC+, agreed on Sunday to further raise oil production beginning in October.
OPEC+ has been increasing production since April after years of cuts to support the oil market, so this new announcement may seem like a threat to an already oversupplied market, but the actual impact is likely to be limited. Indeed, oil prices rallied on Monday.
But this decision still offers significant political benefits to the group’s leader Saudi Arabia, which is seeking to reassert discipline in OPEC+ while expanding its market share and solidifying its relationship with the United States. More on this below.
Here are a few energy-related headlines:
* With the war in Ukraine showing little sign of abating, President Donald Trump said on Sunday that he is ready to move to a second phase of sanctioning Russia. This is the closest he has come to suggesting he is on the verge of ramping up sanctions against Moscow or its oil buyers. Treasury Secretary Scott Bessent said that the U.S. and the European Union could heap “secondary tariffs on the countries that buy Russian oil.” The Trump administration last month hit India with a 25% tariff over its purchases of Russian crude.
* While the U.S. and Europe seek to put more pressure on Russia, Moscow’s energy ties with Beijing continue to tighten. U.S.-blacklisted Russian oil and gas giant Gazprom on Friday received a AAA top-notch grade from the Chinese rating agency CSCI Pengyuan, paving the way for the Russian firm to issue debt in China’s domestic bond market. Such financing could prove vital for Gazprom, and potentially other Russian energy companies, as they seek to develop new resources in Russia. Last week, Russia and China agreed on new gas supply deals and advanced plans to build a huge new pipeline, defying Trump’s efforts to isolate Moscow.
SAUDI SHARE
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.
Read the full column here.
Things to watch out for this week:
* The IEA and OPEC release their monthly oil market reports on Thursday
* EIA weekly stocks data will be published on Wednesday
* The natural gas industry gathers for the Gastech conference in Milan
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Looming oversupply Crude exports from OPEC+ eight
(By Ron Bousso Editing by Anna Szymanski)