The Joint Ministerial Monitoring Committee (JMMC) of OPEC+ held its regular virtual meeting recently. They focused on ensuring that member countries follow the OPEC+ production agreement. Countries that went over their production limits must submit plans to adjust their output by August 18. No new production recommendations were made during this meeting, which limits the JMMC’s impact since production decisions depend on eight OPEC+ countries that are currently cutting back voluntarily. Changes could happen at the next JMMC meeting on October 1, when production increases are expected to be completed. According to a Bloomberg survey, production is expected to rise by nearly 550,000 barrels per day in September. This would reverse the voluntary cuts a year earlier than planned.

Market Insights and Analysis

Market insights and analysis were shared, warning that they contain forward-looking statements with risks and uncertainties. It’s advisable to conduct independent research before making financial decisions. The information provided may not be error-free or timely and should not be seen as a recommendation to buy or sell. The recent JMMC meeting did not provide new production guidance but emphasized the importance of sticking to the current agreement. Countries that overproduced must submit corrective plans by August 18. This indicates a focus on short-term stability and discipline among the group. We expect prices to remain relatively steady as the market awaits these plans until late August. However, compliance remains a challenge. A June 2025 report showed high overall adherence, but several key members overproduced by more than 200,000 barrels per day. The market will closely monitor the credibility and enforcement of these new plans.

Supply and Demand Outlook

The real action for traders may start in September, as surveys suggest a potential supply increase of nearly 550,000 barrels per day. This is significant, representing about 0.5% of global daily consumption, and could push prices down if demand doesn’t keep up. Recent data from the U.S. Energy Information Administration shows a slight rise in crude inventories, indicating a balanced market. This outlook points to increased market volatility in the coming weeks. Historically, the Cboe Crude Oil Volatility Index (OVX) tends to rise before major policy changes, and we expect a similar pattern throughout August and September. Strategies that capitalize on price swings, such as buying straddles or strangles on crude oil options, could be beneficial. With the anticipated supply increase in September, we are preparing for possible price declines. Purchasing put options on Brent or WTI with expiration dates in late September or October offers a defined-risk way to benefit from a potential drop. Additionally, selling out-of-the-money call spreads is another way to express a moderately bearish view while still collecting premiums. The next big event will be the October 1 meeting, introducing more uncertainty. Holding long-term positions may be risky without a clear understanding of the group’s intentions for the fourth quarter. The current global economic outlook, coupled with central banks suggesting interest rates may remain high for a prolonged period, also signals potential challenges for oil demand later this year. Create your live VT Markets account and start trading now.

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