Ample oil supply and reduced prices, as reported by experts.

The global oil market is facing a potential oversupply, according to a recent analysis by Commerzbank. This prediction comes as OPEC+ is considering an increase in production, which could exacerbate the situation.

In a recent development, exports to China, the world's largest oil importer, reached the highest level since late January at 1.6 million barrels per day. However, China's crude oil imports declined in July and could continue to decrease in August, potentially putting additional pressure on the market.

Despite this, a large majority of market participants expect that the production of OPEC+ will not be further increased initially. This is due, in part, to the existing production cuts, including voluntary restrictions, which are fixed until the end of 2026 according to a joint resolution.

However, significant increases in oil deliveries to China and India were observed in the latest reporting week, potentially signalling a shift in the market dynamics. The discount on Russian oil prices seems to be too tempting for buyers in China and India, with oil supplies to India rising to 1.34 million barrels per day.

Russian oil exports increased by almost 30% in the latest reporting week, reaching 3.5 million barrels per day. This increase, coupled with OPEC's daily crude oil production in August at 28.15 million barrels, could contribute to the oversupply concerns.

Commerzbank expert, Carsten Fritsch, notes that OPEC is producing significantly more oil than needed. He suggests that an increase in production could put significant pressure on the oil price. The EIA and IEA are expected to publish new forecasts next week, which may confirm a threat of a considerable oversupply of more than 2 million barrels per day in the fourth quarter.

If production is indeed further increased, the already significant oversupply in the fall and next year could become even greater. This could potentially lead to downward pressure on prices, despite some demand support from China.

However, recent reports suggest that Russia's Deputy Prime Minister Novak has dampened speculations about an increase in production. The damage to pipelines and export terminals from the Ukrainian drone attacks was apparently less severe than feared, offering a glimmer of hope for market stability.

The strategic shift by OPEC+ to regain market share, even if prices decline, with Brent crude expected around $65 per barrel and moderate mid-term price easing anticipated, adds another layer of complexity to the situation. The planned additional OPEC+ oil supply increase by roughly 2.4 million barrels per day will likely add to the global oil surplus, putting downward pressure on prices.

As the situation unfolds, the oil market will continue to closely monitor the decisions made at Sunday's OPEC+ meeting and the subsequent impact on global oil prices.