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OPEC+ decided to open the tap by an additional 188,000 barrels per day in July, and oil responded in the way the market feared: it fell from $112 to $89 per barrel in less than two months — the lowest level since the cartel began cutting production in 2022
The decision made at the group’s meeting in June 2026 is part of the process that OPEC+ calls a “gradual and orderly reversal” of the additional voluntary cuts implemented in April 2023. In practice, the group of 23 producing countries — led by Saudi Arabia and Russia — is undoing, step by step, the reductions made to sustain prices above $80 per barrel. The increase in July is the third consecutive increment by the group since the beginning of 2026.
What complicates the situation is that the market was already in the process of digesting an oversupply even before the July decision. Projections by the International Energy Agency estimate a global surplus of approximately 3.8 million barrels per day in 2026 — a considerable volume for a market that consumes about 103 million barrels daily. With OPEC+ injecting more supply into a basin that was already overflowing, the pressure on prices intensified.
Why does the cartel continue to increase production even with falling prices? The answer has several layers. Saudi Arabia needs prices above $80 to balance its public budget, but it also does not want to lose market share to producers not part of the agreement — especially the United States, which set shale production records in 2025 without any quota restrictions. If OPEC maintains prolonged cuts, it encourages Americans to grow more and occupies less space in the global market.
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Russia, in turn, needs oil revenue to finance the war budget. Moscow has consistently produced above its quotas, and other group members — Iraq, United Arab Emirates, Kazakhstan — have also exceeded the agreed limits before presenting compensation plans. Productive discipline within OPEC has never been perfect, and in times of individual budgetary pressure, it becomes even more fragmented.
For Brazil, which is not part of OPEC but exports heavy pre-salt oil, the price drop tightens the margin. Petrobras calculates its investments with price assumptions between $70 and $80 per barrel — at $89, there is still profit, but the leeway for new projects becomes smaller. If the price continues to fall towards $70, the company begins to revise capital plans and delay decisions on developing new fields.
The consensus among analysts for the second half of 2026 points to a pressured market. China’s demand growing below expectations, American shale on the rise, OPEC+ increasing supply: the combination is deflationary for oil. Those who bet on prices above $100 this year will have to revise their spreadsheets. The market balance now depends on how far OPEC+ is willing to let the price fall before changing strategy.
The drop from $112 to $89 in two months is a 21% contraction — enough to squeeze revenues of producing countries, reduce the number of shale wells that make economic sense in the US, and pressure companies to review capex. The market is in a waiting mode to see if OPEC+ will blink first or if it will maintain the pace of supply increase even with prices at the lowest level in two years.
Do you think oil will return to $100 before the end of the year, or will the market stay in the $80-90 range longer than the industry would like? Comment here.
