OPEC+ started to cut production in 2022 to push up oil prices, but it turned for the first time in May this year, and announced a significant increase in production under Saudi Arabia to compete for market share with other non-OPEC+ oil-producing countries such as the United States. This has caused oil prices to plummet, which has been hovering at a low of between $65 and $70 a barrel since May.

The market also evaluated that by approving another increase in production, Saudi Arabia may hope to push down expected earnings by pushing down oil prices, thereby raising pressure on members who did not comply with quotas.

OPEC+'s latest meeting was held after the 12th battle between Israel and Iran. The war has caused concerns that Iran closed the Strait of Hormuz, once pushing oil prices to more than $80 a barrel.

OPEC+ issued a statement saying that "the stable global economic outlook, coupled with the healthy market fundamentals reflected by low crude oil inventories", is what prompted it to decide to further increase production.

Key members of Saudi Arabia, Russia and six other OPEC+ alliances said on Saturday (July 5) that they would further increase oil production in August, with a daily increase of 548,000 barrels, exceeding the market's original expectations.

Jorge Leon, an analyst at consulting firm Rystad Energy, told AFP: "OPEC+ has been constantly surprised by the market, with the latest increase in output even greater than expected, sending a clear message that it has firmly turned to a strategy of seizing market share."

UBS analyst Giovanni Staunovo pointed out that Kazakhstan and Iraq are actually still continuing to overproduction, which is one of the factors supporting OPEC+ to lift production cuts on Saturday.

OPEC+ has previously increased its daily output by 411,000 barrels in May, June and July for three consecutive months. The market previously predicted that OPEC+ will maintain a daily output of 411,000 barrels in August.

Leon expects that OPEC+ will further increase production in the future based on oil prices remaining above US$60 per barrel, coupled with the fragile Middle East ceasefire agreement and the risk of the Russian-Ukrainian war.