OPEC+ expected to approve fresh oil output increase as prices ease

OPEC+ is expected to approve another increase in oil production when the alliance meets online on Sunday, according to sources familiar with the discussions.

The move comes as global oil prices continue to retreat and crude exports recover following the gradual reopening of the Strait of Hormuz.

Sources told Reuters that OPEC+ has reached a preliminary agreement to raise its collective production target by 188,000 barrels per day (bpd) starting in August. If approved, the increase will follow similar output hikes introduced in June and July as the group continues to unwind voluntary supply cuts.

The additional production is expected to add more crude to global markets at a time when oil prices have eased significantly from their recent peaks.

Supply recovery gathers pace

The seven core OPEC+ producers have already increased their production quotas by nearly 800,000 bpd between April and July.

However, much of the planned increase was not immediately reflected in actual output after the US-Israel conflict involving Iran disrupted exports through the Strait of Hormuz, a vital shipping route for major oil exporters including Saudi Arabia, Kuwait and Iraq.

According to OPEC data, the group’s production fell to 33.13 million bpd in May from 42.77 million bpd in February.

Output began recovering in June as exports resumed from the United Arab Emirates and other producers, although overall production remains below pre-conflict levels.

Oil prices retreat

Despite ongoing supply challenges, global oil prices have returned to levels seen before the conflict.

Brent crude traded near $72 per barrel on Friday after briefly surging above $120 per barrel during the height of regional tensions.

Analysts say the decline has been driven by weaker Chinese demand, increased crude exports from producers outside the Middle East and a record coordinated release of strategic oil reserves by the International Energy Agency (IEA).

The memorandum of understanding aimed at ending the conflict has also improved market confidence, easing concerns over future supply disruptions.

Iraq seeks larger production quota

Alongside plans to increase production, OPEC+ is also facing internal negotiations over output allocations.

Following the United Arab Emirates’ departure from the alliance in April, Iraq has indicated it is seeking a larger production quota.

The remaining seven key producers—Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman—are gradually reversing the 1.65 million bpd production cut agreed in 2023.

Reuters calculations indicate that approximately 379,000 bpd of those cuts remain to be restored after accounting for the UAE’s exit.

If OPEC+ continues increasing production at the current pace, the remaining voluntary cuts could be fully reversed by the end of September.