OPEC+ wrong-footed markets over the weekend by confirming the start of the second tranche unwind of its voluntary production cuts – a 137,000 barrel-per-day (bpd) increase in October. The move comes despite widespread expectations that the group would hold output flat to cushion prices against an already oversupplied 4Q market.

Here is Rystad Energy's oil market update from Chief Economist Claudio Galimberti:

"Riyadh and its allies signaled a decisive pivot: defending market share now outweighs defending prices. The headline volume may look marginal, but the messaging is not. By allowing supply back into a market moving toward surplus, OPEC+ is playing offense, not defense. Traders have been put on notice.

Structural capacity constraints mean that only a handful of members – primarily Saudi Arabia, the UAE, and Iraq – can deliver significant volume uptick, and the compensation mechanism will further cap net additions. But optics dominate barrels in this phase. The psychological signal – that the group is prepared to tolerate softer prices to secure long-term relevance – has reset expectations heading into the fourth quarter."

Beneath the surface, fault lines within OPEC+ are widening. For Russia, every extra dollar matters as crude revenues prop up its budget and offset sanctions-driven strain. Gulf producers, by contrast, are playing a longer game. Saudi Arabia and the UAE are betting that near-term revenue pain is worth locking in market share in the years ahead, particularly as global oil demand growth slows. For now, the Gulf camp is setting the script, and Moscow is playing along. At the same time, it is worth paying attention to the development in the Caribbean, where the US administration has been targeting vessels and will, in the future, potentially target aircraft from Venezuela when suspected of carrying drugs. A military confrontation between the two countries would be a significant source of geopolitical risk in the region and for the oil markets.

The OPEC+ decision collides with a US macro backdrop in flux. A rather dismal August jobs report – just 22,000 payroll gains and downward revisions tipping June into net losses – has markets fully pricing a 25-basis point (bp) Fed cut next week, with three cuts by year-end now at a probability of 80%. Treasury yields slid, equities see-sawed, and gold hit another record high, boosted further by reports that global central banks now hold more gold than US Treasuries for the first time since 1996.

This week’s Consumer Price Index (CPI) and Producer Price Index (PPI) releases (10-11 September) will set the tone for the Fed meeting. Core CPI is expected to hold around 3.1%, but any surprise on the upside could complicate the dovish narrative. In Europe, the European Central Bank’s (ECB) rate decision looms, but markets expect a hold as inflation stabilizes.

For oil markets, the next seven days are about how traders digest OPEC+’s pivot. Expect Brent price volatility as the market reprices its balance narrative: softer prices are tolerated, but OPEC+’s grip on swing supply remains firm.