The Organisation of Petroleum Exporting Countries and its allies, OPEC+, has agreed to raise its oil production target by 188,000 barrels per day from August, adding more crude to the global market amid declining prices.
The decision was reached during an online meeting. The alliance extended the same production increase implemented in June and July, bringing the combined quota increase by its seven core members to nearly 800,000 barrels per day between April and July.
The core members are Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman. The alliance also includes other OPEC members and independent producers.
Despite the higher targets, much of the additional supply has remained unavailable due to geopolitical tensions involving the United States, Israel and Iran. The conflict disrupted tanker movements through the Strait of Hormuz, affecting exports from Saudi Arabia, Kuwait and Iraq.
OPEC data showed the group’s production fell from 42.77 million barrels per day in February to 33.13 million barrels per day in May. Output recovered modestly in June after Washington helped the United Arab Emirates and other regional producers secure alternative export routes, but remained below pre-conflict levels.
Crude prices have returned to pre-conflict levels, with Brent trading near $72 per barrel on Friday after earlier rising above $120. The decline has been linked to weaker Chinese import demand, higher exports from non-Middle East producers, and the coordinated release of strategic reserves by the International Energy Agency.
Union Bank of Switzerland analyst, Giovanni Staunovo, said the decision to continue reversing previous production cuts was in line with market expectations. He added that traders would focus on tanker movements through the Strait of Hormuz and the pace of China’s economic recovery.
OPEC+ said it is also managing internal disagreements following the UAE’s departure in late April and calls from Iraq for a larger quota. Monthly production management is now handled by the seven core members overseeing the gradual restoration of a 1.65 million barrels per day cut agreed in 2023.
Reports indicate the seven members still have about 379,000 barrels per day left to restore. If they approve another increase of similar size at their next meeting on August 2, the remaining 2023 supply cuts would be fully reversed.
