Oil prices ended Friday at $61.87, and there may be more declines ahead. There are reports that Saudi Arabia is pushing for increased oil production, which could lower crude oil prices. OPEC+ might also ramp up output, but probably not as much as in October as summer comes to a close. In 2023, OPEC+ has increased production by 2.5 million barrels per day, apparently due to pressure from the US. Prices below $60 threaten the US shale industry, as seen by a drop in the number of drilling rigs. This decline raises concerns about future US oil production and could impact previous policies.

OPEC Production Decisions

OPEC is still holding back 1.65 million barrels per day while it works to restore full production. They are considering gradually adding between 135,000 and 350,000 barrels per day. This situation could have short-term benefits for inflation, but prices under $60 could cause problems, similar to trying to keep a balloon underwater. With crude oil prices around $85 per barrel, the upcoming OPEC+ meeting is crucial. There are rumors about keeping production steady to help prices, but worries about declining global demand create a lot of uncertainty. We can look back at past situations to understand what might happen next. In the late 2010s, OPEC+ production increases brought WTI crude prices down to nearly $60. This price drop threatened US shale producers’ profits, causing a sharp reduction in drilling. The market discovered that US shale production is very sensitive to these supply changes. This lesson matters today as the US rig count has recently shown some recovery, up 5% year-over-year according to EIA data from August 2025. However, this fragile recovery relies on prices staying above the $75 break-even point for many producers. Any unexpected production increase from OPEC+ could quickly disrupt this progress.

Oil Market Volatility and Strategies

Due to the uncertainty, implied volatility on oil options is rising. A potential strategy is to use options to profit from a significant price movement in either direction, specifically with November contracts. A long straddle, for example, would benefit from a big price change after the meeting’s announcement. In the long run, any price drop from a production increase would probably be temporary. A decline in prices now could reduce US investment, tightening supply for 2026. This could lead to a stronger price rebound once demand stabilizes. Create your live VT Markets account and start trading now.

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