OPEC+ Raises August Output Targets as Oil Markets Stabilize

OPEC+ has agreed to raise oil output targets again from August, according to a statement released on Sunday, adding more supply to the market as oil prices ease and the Strait of Hormuz gradually reopens for exports.

Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman will adjust production while reaffirming their commitment to market stability.

The oil-producing group, which recently lost the UAE as a core member, agreed during an online meeting to increase quotas by 188,000 barrels per day from August, on top of similar increases for June and July. At the same time, producers kept the option to increase, pause, or reverse the phase-out, including the November 2023 cuts already unwound. In addition, any country that overproduced since January 2024 must fully compensate for it, with monthly tracking by the JMMC.

The seven core members of OPEC+, which includes OPEC and allied producers such as Russia, have raised their output quotas from April through July by almost 800,000 bpd. However, the increase has mostly stayed on paper because of the U.S.-Israeli war on Iran, which closed the Strait of Hormuz to tanker traffic for some of the biggest OPEC+ members, including Saudi Arabia, Kuwait and Iraq.

According to Reuters, OPEC+ output fell to 33.13 million bpd in May, down from 42.77 million bpd in February, based on OPEC data. Production started to recover in June after U.S. efforts helped the UAE and other OPEC+ nations export more oil, but it is still below pre-war levels.

Even with supply disruptions still in place, oil prices have returned to pre-war levels. Prices are under pressure from weaker Chinese imports, higher exports from non-Middle East producers, and a record global strategic stock release coordinated by the International Energy Agency.

“The group of seven kept unwinding their production cuts as widely expected,” UBS analyst Giovanni Staunovo said. “The near-term focus will remain on how many tankers will manage to cross the Strait of Hormuz and how quickly demand and Chinese crude imports recover.”

A memorandum of understanding between Washington and Tehran to end the war, which has been breached on several occasions but is still holding, has also helped traders believe that supply will return to normal levels in time.

Brent crude traded near $72 per barrel on Friday, down from recent highs of more than $120 per barrel and back to levels seen just before the U.S. and Israel attacked Iran on February 28.

Along with production targets, OPEC+ is also facing other challenges after the United Arab Emirates left the group and Iraq signaled that it wants higher quotas.

OPEC+ includes 21 members including Iran, but in recent years only the seven nations, and the UAE before its departure, have been involved in monthly production management. Those seven producers — Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman — are boosting output as part of the phased rollback of a 1.65 million bpd supply cut agreed in 2023, when the group still included the UAE.

In a major shift, the UAE left the alliance in late April because it wanted to match its capacity more closely with its production, without the output limits set by the group. From August, taking into account the UAE’s exit from May 1, the seven core members will still have about 379,000 bpd of the original cut to return to the market, according to Reuters calculations.

With the August increase now confirmed, they will have fully reversed the 2023 cut if they approve one more hike of around the same size for September at their next meeting on August 2.