ExxonMobil(US:XOM) Zhi Tong Cai Jing·2025-07-06 23:40Core Viewpoint - The recent decision by OPEC+ to accelerate oil production is expected to exacerbate global oil supply surplus in the second half of the year, responding to U.S. President Trump's call to lower fuel prices while putting price pressure on oil-producing countries [1][2]. Group 1: Supply Dynamics - OPEC+ has decided to restore 548,000 barrels per day of production starting in August, significantly higher than the previous increase of 411,000 barrels per day from May to July [7]. - The International Energy Agency has predicted a global oil surplus of 1.5% over consumption in the fourth quarter, raising skepticism about OPEC's ability to meet demand with the new production levels [3]. - Despite the increase in production, actual supply impacts may be less than expected due to pressure on overproducing countries to adhere to quotas [7]. Group 2: Market Reactions - Oil prices in London have dropped by 11% over the past two weeks, indicating that traders do not see an urgent need for increased production despite geopolitical tensions [6]. - The U.S. key oil storage hub in Cushing has seen a continuous decline in crude oil inventories, which has not yet shown signs of oversupply [2]. - Analysts suggest that unless there is a visible increase in inventories, the path for oil prices to decline further is not clear [7]. Group 3: Economic Implications - The price drop could severely impact the U.S. oil industry, with shale oil executives expecting a significant reduction in drilling activity by 2025 due to weak oil prices [8]. - Saudi Arabia's economic transformation plan requires oil prices to remain above $90 per barrel, and ongoing fiscal pressures may lead to further supply cuts if the situation persists [8]. - OPEC+ officials have indicated that the production increase plan can be paused or reversed based on market conditions, highlighting the flexibility in their strategy [7].