OPEC+ has agreed to increase its oil production targets by 188,000 barrels per day (bpd) from August, adding further supply to the global market as exports through the Strait of Hormuz continue to recover and crude prices remain under pressure.
The decision, announced following an online meeting on Sunday, follows similar production target increases implemented for June and July. Since April, the group’s seven core producers have raised their output quotas by nearly 800,000 bpd.
However, much of that increase has yet to translate into actual production due to disruptions caused by the U.S.-Israeli war on Iran, which temporarily closed the Strait of Hormuz to tanker traffic. The waterway is a critical export route for major OPEC+ producers, including Saudi Arabia, Kuwait and Iraq.
According to OPEC data, the group’s production fell from 42.77 million bpd in February to 33.13 million bpd in May. Output began recovering in June as U.S. efforts helped the United Arab Emirates and other OPEC+ producers resume exports, although production remains below pre-war levels.
Despite ongoing supply disruptions, oil prices have retreated to levels seen before the conflict. Brent crude traded near $72 per barrel on Friday, down from recent highs above $120 per barrel. Prices have been weighed down by weaker Chinese imports, increased exports from producers outside the Middle East and a record global strategic stock release coordinated by the International Energy Agency.
UBS analyst Giovanni Staunovo said the latest production increase was widely expected, adding that market attention will remain focused on how quickly tanker traffic through the Strait of Hormuz normalizes and whether demand, particularly from China, rebounds.
Market sentiment has also been supported by a memorandum of understanding between Washington and Tehran aimed at ending the conflict, reinforcing expectations that global oil supplies will gradually return to normal.
Beyond production policy, OPEC+ is facing internal challenges following the United Arab Emirates’ departure from the alliance and Iraq’s push for a higher production quota.
While OPEC+ includes 21 member countries, only seven producers—Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman—are currently managing monthly production levels. These countries are gradually reversing a collective 1.65 million bpd production cut agreed in 2023, when the UAE was still part of the group.
The UAE exited the alliance on May 1 after seeking greater flexibility to align its production with its capacity without being constrained by OPEC+ quotas.
Taking the UAE’s departure into account, Reuters calculations indicate the seven remaining core producers will still have around 379,000 bpd of the original 2023 production cut left to restore after the August increase.
If OPEC+ approves another production increase of a similar size at its next meeting on August 2, the group will have fully reversed the 2023 output reduction by September.
