OPEC+ Approves Fresh Oil Output Increase for August

The OPEC+ alliance agreed to increase oil production quotas once again, approving a collective output hike of 188,000 barrels per day (bpd) starting in August as the group continues its measured strategy of restoring supply to the global market.

The latest increase follows similar production adjustments implemented in June and July, reflecting the alliance's confidence that market conditions are improving after months of disruption caused by regional conflict and supply constraints.

OPEC+, which brings together members of the Organization of the Petroleum Exporting Countries and major non-OPEC producers led by Russia, has already added roughly 800,000 bpd between April and July through coordinated production increases by seven key participating countries.

Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan and Algeria confirmed revised production levels while reiterating their commitment to maintaining market stability and balancing global supply with demand.

Despite the production increases, the impact on global supplies has remained limited due to disruptions linked to the conflict involving Iran, which affected tanker traffic through the Strait of Hormuz and temporarily constrained exports from several major Gulf producers, including Saudi Arabia, Kuwait and Iraq.

According to OPEC data, the alliance's oil production declined to 33.13 million barrels per day in May, compared with 42.77 million barrels per day recorded in February, underscoring the scale of supply disruptions experienced during the period of heightened geopolitical tensions.

Production began recovering during June, although export volumes and shipping activity have yet to fully return to pre-conflict levels.

Crude prices have largely retreated to levels seen before the regional conflict despite lingering supply risks. The decline has been driven by weaker Chinese crude imports, stronger exports from producers outside the Middle East, and one of the largest coordinated releases of strategic petroleum reserves carried out with the support of the International Energy Agency.

Market sentiment has also improved following the memorandum of understanding aimed at ending the conflict, boosting expectations that oil supplies will gradually normalize in the coming months.

Brent crude traded near $72 per barrel on Friday, down sharply from highs above $120 per barrel reached during the peak of geopolitical tensions, returning to levels seen before the U.S. and Israeli strikes on Iran.

Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman are continuing to unwind part of the 1.65 million bpd voluntary production cuts agreed in 2023 under the alliance's broader supply management strategy.

Following the withdrawal of the United Arab Emirates from OPEC+ at the end of April, the remaining participating countries have adjusted their production roadmap accordingly.

Based on Reuters calculations, the seven producers still have approximately 379,000 bpd of the original voluntary cuts left to restore beginning in August. If the current pace of output increases is maintained, the remaining reductions are expected to be fully phased out by the end of September.