OPEC+ output hike plans cause oil prices to drop

Oil prices fell by about two per cent on Wednesday ahead of a weekend meeting of OPEC+ producers that is expected to consider another increase in production targets in October.

Brent crude fell $1.17, or 1.69 per cent, to $67.97 a barrel by 12:16 EDT (16:16 GMT). US West Texas Intermediate crude fell $1.21, or 1.84 per cent, to $64.38 a barrel.

Eight members of the Organization of the Petroleum Exporting Countries and allies - known as OPEC+ - will consider further raising oil production at a meeting on Sunday, two sources familiar with the discussions told Reuters, as the group seeks to regain market share.

The prospect of OPEC+ raising oil production has increased ahead of the meeting, said Phil Flynn, senior analyst with Price Futures Group. Traders had expected the group to stay the course.

Another boost would mean that OPEC+, which pumps about half of the world's oil, would be starting to unwind a second layer of output cuts of about 1.65 million barrels per day, or 1.6 per cent of world demand, more than a year ahead of schedule.

The group had already agreed to raise output targets by about 2.2 million bpd from April to September, in addition to a 300,000 bpd quota increase for the United Arab Emirates.

"If output is raised in line with new quotas, we see the market moving into a sizeable surplus from September 2025 through 2026, with inventories building unless countered by renewed restraint," said Ole Hvalbye, an analyst at SEB bank.

Actual increases from the group, however, have fallen short of its pledges as some members compensated for previous over-production and others struggled to raise output due to capacity constraints.

Soft economic data, which tends to weigh on the demand outlook for oil, also pressured prices. US Labor Department data showed on Wednesday that job openings, a measure of labor market demand, fell more than expected to 7.181 million in July. Economists polled by Reuters had expected 7.378 million.

Earlier this week, US manufacturing contracted for a sixth month.

The oil benchmarks settled up more than one per cent in the previous session after the US imposed new sanctions on a network of shipping companies and vessels led by an Iraqi-Kittitian businessman for smuggling Iranian oil disguised as Iraqi oil.

(Additional reporting by Ahmad Ghaddar and Seher Dareen in London, Colleen Howe in Beijing and Jeslyn Lerh in Singapore; Editing by Barbara Lewis, Emelia Sithole-Matarise and Nia Williams)