Overview
OPEC+ is expected to endorse another increase in collective production targets that would take effect from August, according to persons briefed on the matter. The planned augmentation is 188,000 barrels per day (bpd), and would be in addition to comparable quota rises implemented for June and July.
Details of the decision
Participants in the online discussions indicated that a 188,000 bpd uplift was the most likely outcome of the meeting. The step forms part of a phased approach to roll back output restrictions that were agreed in 2023 when the group still included the United Arab Emirates (UAE).
Core producers and prior increases
Seven core members of OPEC+ - Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman - have increased their agreed quotas between April and July by almost 800,000 bpd. These quota adjustments represent the group’s coordinated effort to restore volumes after earlier supply curbs.
Production versus reality
Despite the agreed increases on paper, actual production has been held back by disruptions linked to the U.S.-Israel war on Iran, which led to the closure of the Strait of Hormuz to tankers from several key OPEC+ producers, including Saudi Arabia, Kuwait and Iraq. As a result, OPEC-reported output fell to 33.13 million bpd in May from 42.77 million bpd in February. Production began to recover in June after U.S. efforts helped the UAE and other members export more oil, but overall volumes remain below the pre-conflict levels.
Market response and price dynamics
Oil prices have moved back to levels seen before the onset of the conflict despite ongoing supply interruptions. Traders cited a combination of weaker Chinese import demand, increased exports from producers outside the Middle East, and a record coordinated release from global strategic reserves arranged by the International Energy Agency as key factors pressuring markets. A memorandum of understanding to end the war has also contributed to trader confidence that supply will eventually normalize.
Brent crude traded near $72 per barrel on Friday, down from recent peaks above $120 per barrel.
Political and organisational headwinds
Beyond agreeing production objectives, OPEC+ faces other complications. The UAE formally left the alliance in late April, citing a desire to align its declared capacity more closely with its own production and to avoid the production restraints imposed by the group. Separately, Iraq has signalled that it seeks higher quotas, adding to the internal pressures the group must manage.
Implications for the phased rollback
The seven remaining producers are advancing output as part of the staged unwind of a 1.65 million bpd supply cut agreed in 2023. Taking into account the UAE’s exit effective May 1, the seven producers have roughly 379,000 bpd of the original cut still to return to the market starting in August. If they continue increasing quotas at the same pace, that would imply the remainder of the cut could be unwound by the end of September.
Bottom line
The planned 188,000 bpd quota increase for August signals OPEC+’s intention to continue restoring withheld volumes. Nevertheless, actual flows remain constrained by shipping disruptions and the practical effects of the UAE’s departure and intra-group quota disputes, meaning the pace at which supply returns to pre-war levels will depend on operational and political developments.
Note: This article reports the intentions and figures under discussion within OPEC+ and records reported production and price levels as presented by OPEC and market data.