OPEC+ expected to approve another increase in oil production

OPEC Plus is expected to approve another increase in oil production when member countries hold an online meeting on Sunday.

OPEC Plus is expected to approve another increase in oil production when member countries hold an online meeting on Sunday. According to sources familiar with the discussions, the group is likely to raise its production target for August by 188,000 barrels per day as it continues gradually restoring output following earlier supply cuts.

If approved, the increase will follow similar production adjustments made for June and July. Since April, key members of the alliance have been steadily raising output as part of a planned reversal of production cuts introduced in 2023 to support global oil prices.

The alliance includes the members of OPEC along with major oil producing countries such as Russia. Seven leading producers including Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman have already increased their production targets by nearly 800,000 barrels per day over recent months. However, much of that additional supply has yet to fully reach international markets because of disruptions caused by the recent conflict involving Iran.

The war led to restrictions in the Strait of Hormuz, one of the world’s most important shipping routes for crude oil. The temporary disruption affected exports from several major Gulf producers, including Saudi Arabia, Iraq and Kuwait, reducing the amount of oil available in global markets. Although exports have gradually resumed following efforts to reopen the waterway, production levels remain below those recorded before the conflict.

According to OPEC data, the group’s total oil production dropped sharply during the height of the crisis before beginning to recover in June. Officials say improvements in shipping conditions have allowed countries such as the United Arab Emirates and other Gulf producers to increase exports once again, although supplies have not yet fully returned to earlier levels.

Despite ongoing supply challenges, global oil prices have fallen back to levels seen before the conflict. Analysts say weaker demand from China, increased exports from producers outside the Middle East and the release of strategic oil reserves by the International Energy Agency have all contributed to easing pressure on prices. The agreement that helped end the conflict has also improved confidence that normal supply levels will eventually return.

Brent crude was trading near 72 dollars per barrel at the end of the week, significantly lower than the highs recorded during the height of the crisis when prices briefly exceeded 120 dollars per barrel. The decline reflects growing confidence among traders that the global oil market will remain adequately supplied in the coming months.

Alongside production decisions, OPEC Plus is also dealing with internal challenges. The United Arab Emirates recently left the alliance after seeking greater freedom to produce oil according to its own capacity rather than group quotas. At the same time, Iraq has indicated that it wants a larger production allocation as demand for its exports continues to grow.

The current production increases are part of the gradual removal of a 1.65 million barrel per day supply cut agreed by the alliance in 2023. Following the departure of the United Arab Emirates, member countries have adjusted their plans to account for the change in the group’s structure. If production continues to rise at the current pace, analysts estimate that the remaining cuts could be fully reversed by the end of September, bringing more oil back into global markets and helping meet future demand.