Seven core members agreed to add 188,000 barrels per day in August, continuing a gradual unwinding of 2023 production cuts
Andrey Rudakov / Bloomberg via Getty Images
Seven core members of OPEC+ agreed Sunday to raise collective oil output targets by 188,000 barrels per day starting in August, marking a fifth consecutive monthly increase as the group continues rolling back production cuts introduced in 2023. The countries involved are Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman, OPEC said in a statement.
The decision comes as shipping through the Strait of Hormuz — the waterway that carried roughly one-fifth of the world's oil before the conflict — shows early signs of recovery. Data from ship-tracking firm Kpler, reported by The Wall Street Journal, put the strait's daily crossing count at roughly 40 vessels on average in the days around July 2, with individual days ranging anywhere from 30 to 60 transits. That compares with roughly 130 daily crossings before the war began on Feb. 28.
The increase brings total quota additions to 940,000 barrels per day since the war began. With one more hike of similar size expected at the group's Aug. 2 meeting, Reuters calculations show the seven members would complete the full reversal of their 2023 cuts.
The strait's closure following Iran's retaliation for U.S. and Israeli strikes rendered the earlier quota hikes largely meaningless on the ground — OPEC's own figures show collective group output cratered to 33.13 million barrels per day by May, a steep drop from the 42.77 million barrels per day recorded in February. Washington and Tehran signed an interim agreement on June 17 to halt hostilities and reopen the waterway, and Gulf producers have since begun restoring shipments.
Friday's Brent crude price of roughly $72 a barrel represented a dramatic retreat from wartime highs that had briefly exceeded $120, putting the benchmark essentially back where it had traded on the eve of the conflict. Market analysts have warned that resuming Gulf supply could push the global crude market into oversupply. "A wave of oil is about to enter the market," JPMorgan $JPM analysts wrote in a note cited by The New York Times.
The decision also arrives at a fraught moment for the alliance's internal cohesion. Long at odds with OPEC over production ceilings it viewed as too restrictive, the United Arab Emirates formally departed the alliance on May 1, a move that stripped the group of what had been its third-largest contributor. Founding member Iraq has reportedly told the organization it could follow the UAE out the door unless it is granted a more generous production allowance, according to Bloomberg.
In its statement, the group quoted language emphasizing a "cautious approach" and pledged to retain the option to "increase, pause or reverse" the ongoing production phase-out, while committing to continued scrutiny of market developments. The seven members are next scheduled to meet on Aug. 2.
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