OPEC+ decision enhances market stability: Analysts

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OPEC+ agreed on a gradual output increase of 548,000 barrels per day (bpd) starting August 2025, as part of a plan to phase out the voluntary cuts of 2.2 million bpd.

Several experts told Argaam that the decision reflects the alliance’s attempt to strike a delicate balance between supporting market stability and avoiding price pressures, especially amid uncertainty about the global economic outlook. They stressed that the flexibility of the decision gives OPEC+ room to respond to any unexpected demand or geopolitical shocks.

Strategic flexibility and cautious expansion

Wael Makarem, Chief Market Strategist at Exness

Wael Makarem, Chief Market Strategist at Exness, said OPEC+ is likely to continue a gradual output increase during the July meeting, with strict adherence to the scheduled quantities as part of a flexible policy that allows for adjustment or temporary suspension based on market conditions.

In a phone call with Argaam, Makarem explained that this flexibility gives the alliance a strategic tool to manage the market proactively, especially in light of the economic uncertainty stemming from rapid shifts in US trade policies.

Ali Al-Riyami, former Director General of Oil and Gas Marketing at Oman’s Ministry of Energy and Minerals

For his part, Ali Al-Riyami, former Director General of Oil and Gas Marketing at Oman’s Ministry of Energy and Minerals, said that the eight OPEC+ countries will continue injecting around 411,000 bpd from August through October 2025, as part of a plan to gradually restore the withheld volumes through the end of 2027.

He noted in a call with Argaam that the timing of the increase is appropriate, especially with the rising demand during the summer season, which coincides with peak travel.

He added that the decision had limited impact on prices over the past three months due to overlapping political and trade factors, most notably geopolitical tensions, ambiguity around tariffs, and the unclear global economic outlook.

He confirmed that these factors contributed to a timely OPEC decision, starting with the implementation of the increase in May. However, he warned that the fourth quarter of 2025 may reveal real challenges, questioning whether Chinese growth will be sustainable or temporary, which has a direct impact on market trends.

Regarding seasonal gasoline demand in the US, Al-Riyami explained that the observed decline is linked to weekly data fluctuations and storage conditions.

However, he pointed out that global demand levels remain stable between 104 and 105 million bpd, according to OPEC and IEA reports, confirming that the shift toward renewable energy has yet to make a tangible impact on actual oil consumption.

Global demand: China and the US in focus

Makarem noted that developments in the Chinese economy significantly affect global oil demand expectations, as China is one of the largest sources of demand.

He pointed out that the slowdown in the services sector, which reached its lowest level in several months, could lead to weaker transportation fuel consumption and thus impact overall demand forecasts.

He added that the rise in US inventories reflects a relative decline in consumer demand, adding pressure on market stability.

Meanwhile, Al-Riyami said economic activity in China remains stable at acceptable levels, especially after government intervention at the end of Q4 2024 to support the industrial, real estate, and commercial sectors, which helped stabilize growth.

He added that any effective trade deal between China and the US —despite the lack of full details—would stabilize China’s economy and increase commercial activity in 2026, thereby gradually boosting oil demand, albeit modestly.

He emphasized that the relationship between Beijing and Washington, particularly regarding tariffs, is a critical factor in shaping oil demand patterns.

He expressed optimism about China, especially as early indicators show mutual understandings with the U.S., which is a positive sign for global demand.

Rate cuts: A potential boost for growth and energy demand

Makarem believes that interest rate cuts may strongly stimulate global economic activity, especially if the US Federal Reserve and other major central banks proceed with cuts in the second half of 2025.

He indicated that this monetary stimulus often translates into increased fuel consumption, particularly in the transportation and industrial sectors, boosting global oil demand.

For his part, Al-Riyami pointed out that US market expectations suggest two to three rate cuts before year-end, contingent on continued positive indicators.

He added that each 1% growth in the global economy is estimated to add around 1 million barrels per day in oil demand.

He noted that any stimulative move by the Federal Reserve could be followed by similar actions from the European Central Bank and major Asian banks, reinforcing a global trend toward economic stimulation.

Al-Riyami emphasized that the key element in supporting demand remains tied to clear agreements on tariffs, particularly between China and the U.S., given their direct impact on trade and market confidence.

US crude inventories: Import surge and demand fluctuations

Makarem said that the surge in U.S. crude imports—exceeding 976,000 barrels per day—helped boost inventories, noting that the rise in gasoline stocks reflects weak end-user demand despite active refining operations.

Meanwhile, Al-Riyami explained that this increase is due to refiners preparing for the summer season. However, he warned that weekly data alone is insufficient for accurately assessing market conditions, calling for broader seasonal analysis that considers overall market movements.

He stressed that interpreting this data requires a dynamic analysis rather than just a weekly numerical follow-up, especially ahead of peak seasons like summer.

OPEC+ decisions: Navigating economic and geopolitical factors

According to Makarem, OPEC+ decisions are based on global demand forecasts, which are linked to economic growth, aiming to avoid oversupply and ensure price stability.

He explained that maintaining appropriate prices is essential to cover member states’ budget needs, and that preserving market share is a strategic objective.

Meanwhile, Al-Riyami noted that geopolitical factors play a role no less important than economic ones in shaping OPEC+ decisions.

He confirmed that the market has gradually adapted to the recent production increase and that the summer supply-demand balance supports continued current output levels.

Al-Riyami warned that large oil inventories in major countries could reshape the market later, considering Q4 2025 and Q1 2026 to be pivotal for OPEC+ strategies.

He also expects the current policy to continue without further voluntary cuts, likely adjusting based on market and geopolitical developments, especially those related to global trade.

He pointed out that improved trade conditions—particularly those related to tariffs between China and countries like India, Japan, Canada, and Europe—would support the global economy and reflect positively on oil demand.

He expressed optimism about the possibility of reaching trade agreements and easing geopolitical tensions, especially in the Gulf and the Middle East, stressing that the world needs a period of stability, given its direct impact on people’s daily lives and global markets.