OPEC+ Plans Another Modest Oil Output Increase for August as Supply Stabilizes

OPEC+ is preparing to raise its oil production quotas by a modest amount for August, continuing its gradual rollback of the production cuts introduced last year. Delegates from seven major producers, including Saudi Arabia and Russia, reportedly reached a preliminary agreement to increase combined output by 188,000 barrels per day, pending approval at an upcoming virtual meeting.

This latest increment would bring total quota additions since the easing began to about 940,000 barrels per day, which equals nearly 1 percent of global oil demand. The move reflects the cartel’s strategy to cautiously restore supply while supporting oil prices following the sharp cuts implemented in 2023.

Earlier attempts to raise production were restricted by disruptions from regional conflicts and the closure of strategic chokepoints like the Strait of Hormuz. However, a recent interim peace accord between the United States and Iran has allowed Gulf producers to resume shipments more freely. As a result, Saudi Arabia and the United Arab Emirates have nearly restored exports to pre-conflict levels, according to tanker tracking data. Improved access through the Strait of Hormuz has eased shipping bottlenecks, contributing to increased supply, especially in key Asian markets.

The return of crude volumes to the market has helped reverse earlier steep price increases that followed the disruptions. This recovery in supply also fuels competition among OPEC members as they seek to regain or expand their market share. Despite this, the alliance faces internal discord. Iraq has signaled possible withdrawal if its demand for a higher production quota is not met, echoing the United Arab Emirates’ earlier exit over similar concerns.

If agreed upon, this August increase would be the second-to-last step in lifting the two rounds of output cuts from 2023, with a final increase expected in September to complete the quota restoration. The phased approach aims to balance market stability with global demand recovery while managing geopolitical risks in the region.