OPEC+ Raises Oil Production Quotas Again as Middle East Calms

“For now, production is probably still below” OPEC+’s targets, says Giovanni Staunovo, a commodity analyst at UBS.

The recent war in the Middle East had disrupted oil exports through the Strait of Hormuz, leading to a shortage in global oil supplies. Seven OPEC+ members

• Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman - met virtually on Sunday to discuss their oil production quotas.

After some deliberation, they decided to raise their oil production quotas by 188 thousand barrels per day. This adjustment will be implemented in August 2026.

The decision came as the Strait of Hormuz shipping lane has slowly recovered since the war. Ship transport in the region has returned to normal, and oil prices have dropped sharply to levels comparable to those seen before the war.

According to a US official quoted by Bloomberg, oil supplies through the shipping lane have already exceeded ten million barrels a day.

But it may take time for oil production to fully recover. ‘Shut-in production takes time to restart,’ Saxo Bank analyst Ole Hansen told AFP.

Assuming shipping continues to normalize, July will show an improvement, and August may be the month where the pickup accelerates, Hansen added.

For next year, everybody is anticipating a surplus, said Jorge Leon, an analyst at Rystad Energy.

However, rebuilding the inventories that countries tapped during the conflict may help absorb the flows at first. Producers may, however, face a strong downward pressure on prices later on.

In this context, the need for a higher quota is not imminent, as production volumes are still far from their pre-conflict levels, Hansen said.

Iraq, in particular, has asked the cartel to raise production quotas to make up for the shortfall it incurred during the war in the Middle East.

But the request may become part of the 2027 capacity review, where production baselines will be examined, Hansen added.

This move is significant, especially with the ongoing crisis between Iran and the West.

The recent decision by OPEC+ to raise oil production quotas is a crucial move in the efforts to normalize oil supplies in the Middle East. The decision may lead to a further drop in oil prices as supplies continue to normalize.