OPEC+ is expected to approve an additional rise in oil production targets starting in August, adding to global supply as oil prices decline amid the partial reopening of the Strait of Hormuz for exports. The alliance, which includes OPEC members and allied producers like Russia, has agreed in principle to boost production quotas by 188,000 barrels per day from August onward.
This increase follows similar output hikes implemented in June and July. Seven core OPEC+ members have already raised their quotas by nearly 800,000 barrels per day between April and July. However, actual production has lagged due to the US-Israeli conflict with Iran, which effectively shut down the Strait of Hormuz, blocking exports from key producers such as Saudi Arabia, Kuwait, and Iraq.
Official OPEC figures indicate that total alliance output fell sharply from 42.77 million barrels per day in February to 33.13 million barrels per day in May. Production began to recover slightly in June after US efforts helped the UAE and other members increase exports, though output remains significantly below pre-conflict levels.
Despite these supply disruptions, global oil prices have returned to pre-war levels. Factors contributing to this decline include decreased imports by China, increased exports from producers outside the Middle East, and a historic global strategic stock release coordinated by the International Energy Agency. Additionally, a memorandum of understanding aimed at resolving the conflict has reassured energy traders that supply will eventually normalize.
Brent crude prices hovered near $72 per barrel on Friday, down from highs exceeding $120 per barrel earlier this year. This price matches levels seen just before the US and Israeli attacks on Iran on February 28.
In a significant development, OPEC+ is also managing internal challenges following the UAE’s departure from the alliance, alongside Iraq’s push for higher individual production quotas. The seven remaining core producers—Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan, and Oman—are increasing output as part of a phased rollback of a 1.65 million barrels per day cut agreed upon in 2023, when the UAE was still a member.
The UAE left the alliance in late April to gain more flexibility over its production capacity, no longer bound by the group’s strict limits. Calculations show these seven producers have about 379,000 barrels per day of the original supply cut left to restore to the market from August, after accounting for the UAE’s exit on May 1. If current monthly increases continue, the remaining supply cut will be fully reversed by the end of September.
