OPEC+ countries say they will expand monthly oil production

Seven OPEC+ members, including Saudi Arabia and Russia, to increase output by ۱۸۸,۰۰۰ barrels per day.

OPEC+ members have announced plans to boost oil production as energy markets show tentative signs of recovery amid the fallout of the US-Israel war on Iran.

OPEC+ said on Sunday that seven member countries – Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman – would raise output by ۱۸۸,۰۰۰ barrels per day from August after officials held a virtual meeting to “review global market conditions and outlook”.

The production boost is the fifth consecutive increase announced by the seven OPEC+ members in as many months, continuing a gradual unwinding of production cuts announced in ۲۰۲۳.

OPEC+, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allied oil producers – including Russia, Bahrain and Oman – cut output in April ۲۰۲۳, and again in November ۲۰۲۳, amid a string of bank collapses that triggered a major sell-off in oil and other commodities.

“The countries will continue to closely monitor and assess market conditions,” the intergovernmental organisation said in a statement, adding that officials had “reaffirmed the importance of adopting a cautious approach and retaining full flexibility to increase, pause or reverse the phase out of the voluntary production adjustments”.

The seven member countries added that they would meet again on August ۲ to review the situation.

After briefly topping $۱۲۶ a barrel in April, Brent crude oil prices have fallen back to pre-war levels in recent days amid growing hopes for a permanent end to the Iran conflict and a return to normal shipping in the Strait of Hormuz.

Traffic in the strait has ticked up since US President Donald Trump and Iranian President Masoud Pezeshkian signed their memorandum of understanding on ending the war on June ۱۷, though it remains far below pre-conflict levels.

There were ۳۸ confirmed transits in the strait on July ۲, down from ۴۸ on July ۱, according to the vessel tracking platform MarineTraffic, compared with roughly ۱۳۰ daily crossings before the war.

Brent crude futures for September delivery stood at $۷۲ as of ۰۲:۰۱ GMT on Monday, below Brent’s settlement price of $۷۲.۴۸ on February ۲۷, the day before US and Israel launched strikes on Iran, starting the war.

Iran’s effective closure of the Strait of Hormuz, which carried about one-fifth of global oil and liquefied natural gas supplies before the start of the war, forced OPEC+ members to slash production as a growing backlog of unshipped barrels maxed out the region’s crude storage capacity.

Total OPEC+ production dropped to ۳۳.۱۳ million bpd in May, down from ۴۲.۷۷ million bpd in February, according to OPEC figures.

Fabien Yip, a market analyst at IG in Sydney, Australia, described OPEC+’s latest production increases as largely being a “paper formality” in light of the real-world conditions affecting supply.

“Actual barrels have been constrained for months by the Strait of Hormuz blockade, falling well short of the quota,” Yip told Al Jazeera.

“That constraint is now easing, driving prices down.

“Saudi Arabia has more than doubled the shipping volume since June ۱۷ than the prior three months combined, and Iran has pushed close to ۵۰ million barrels of its crude to market since the naval blockade lifted,” Yip added, referring to the US naval blockade of Iranian ports.

“Add OPEC+’s incremental barrels to that backlog clearing, alongside softer Chinese demand and higher US and Russian exports, and the setup is a near-term oversupply. Oil futures’ retreat to pre-war levels reflects that.”