I’m going to tell you something that has never been uttered from my lips before.
OPEC was right to raise production.
The veteran members of our Energy and Capital investment community know that is something I don’t say lightly. After all, for as much as we know the IEA numbers are slanted bearish, the opposite could be said of OPEC’s nearly perma-bullish stance over the decades.
For as long as we can remember, there’s always been two factions at war with one another inside OPEC — the doves and hawks of the world’s biggest oil cartel; each taking their own side when it comes to the group’s output and pricing.
On one side, we have the price hawks that crave higher crude prices and lower supply. Typically, these are the OPEC members with limited upside production potential, so it makes sense they’d want to get the most bang out of their buck; countries like Iran, Iraq, and Venezuela.
On the other side of the fence are your heavy producers like Saudi Arabia and Kuwait, who take a dovish stance on prices, mostly because their higher output and low costs allow them to maintain market share and keep a long-term stranglehold on the value of their huge reserves.
After OPEC and its allies (mostly Russia) decided to add more than 400,000 barrels per day to their June output, the market started to price in a second output increase in July.
And you know what?
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They were right to do so… but it’s WHY that’ll shock you.
After OPEC+’s June output hike, the real question on the market’s mind was whether they’d follow it up with a back-to-back increase in July. The speculation was enough to drive investors crazy — surely it would be enough to put even more pressure on prices and send them back into the $50/bbl range.
And yet crude prices jumped as much as 4% after the news was announced recently.
So what do they know that you don’t?
To answer that, you’ll have to understand why raising output was the correct move.
Look, we’ve been skeptical over OPEC decisions for decades at this point — especially given the group’s history of cheating on quotas and shady reserve increases — and there are a few things the market hasn’t quite realized yet.
The first and perhaps most obvious is that global demand is stronger than most believe. The IEA’s most recent oil confession is proof that the perma-bears have been in the wrong and have been cooking the numbers for years to artificially keep crude prices low.
Well, it turns out that everyone is changing their tune. Countries that participate in the Joint Organizations Data Initiative (JODI) reported demand growth of 793,000 barrels per day this past March compared with February’s demand; for the record, that’s 2.19 million barrels per day higher year over year!
This story is more than everyone is underestimating global demand growth, too, due to the fact that global inventories are also well below the 5-year average.
Higher demand, lower supply… Dear reader, you’re witnessing firsthand one axiomatic truth in the oil market: The cure for low oil prices IS low oil prices.
For all its gruff, OPEC’s solitary mission should be to keep oil markets balanced. That’s precisely why they’re adding more barrels to the market, because the supply/demand fundamentals during the second half of 2025 are getting much tighter.
This is why crude prices are rising on news that OPEC is hiking output.
However, OPEC+ knows something else that is overlooked by many investors, too — U.S. oil production is going to start heading lower soon.
I’ve told you before that we can safely dismiss the weekly U.S. production numbers from the EIA, which are simply based on their Short-Term Energy Outlook forecasts. In other words, they don’t really give us an accurate picture of our domestic output.
For that, it’s better that we turn to their Monthly Petroleum Report, the numbers for which are usually delayed by a few months. The EIA’s most recent one showed that U.S. crude oil production hit an all-time high of 13.48 million barrels per day in March.
Soon, those reports are going to start showing our output heading in the other direction; the low oil price environment will ensure that much. How low our output drops, however, is the real question. I’ve seen some estimates calling for U.S. oil production to fall as low as 12.5 million barrels per day.
What’s interesting is that only one oil region has experienced any real growth at all for the last five years!
Go ahead and take a look at the difference between tight oil production inside and out and out of the Permian Basin since our oil boom kicked off more than 15 years ago:
Outside of the Permian, oil production growth has been essentially flat. Keep in mind that this took place despite oil prices climbing well above $100 per barrel in 2022, too!
The game has changed in the U.S. oil patch, that much we’re sure of.
And it’s that thought alone that should have you questioning whether you’re looking in the best place for oil profits in this new oil era. If you haven’t realized what we’ve seen coming by now, the good news is that it’s not too late to take advantage of this generational shift for U.S. oil drillers.
I think it’s about time you let me show you how the best Permian oil stocks will thrive in the years ahead.
This is an opportunity you have to check out for yourself firsthand.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing's Energy Investor and Technology and Opportunity.
For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.
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