OPEC+ Approves More Oil Output Amid Falling Prices, Sources Indicate

OPEC+ Set to Agree on Further Output Increase Amid Falling Oil Prices

Sources with knowledge of the matter say OPEC+ is set to agree on another increase in output targets from August. This comes as global supply dwindles due to a gradual reopening of the Strait of Hormuz for oil exports.

The group has agreed in principle to increase quotas by 188,000 barrels per day from August, adding to similar increases for June and July. Seven core members have increased their output quotas from April through July by almost 800,000 barrels per day.

However, these increases remain largely on paper due to the US-Israeli war on Iran, which closed the Strait of Hormuz for some OPEC+ members’ tankers. OPEC+ output fell to 33.13 million bpd in May, according to data, from 42.77 million bpd in February.

Despite supply disruptions, oil prices have returned to pre-war levels due to lower Chinese imports and higher exports from non-Middle East producers. A record global strategic stock release coordinated by the International Energy Agency has also helped.

The memorandum of understanding to end the war has convinced traders that supply will return to normal levels. Brent crude prices traded near $72 per barrel on Friday, down from recent peaks over $120 per barrel.

OPEC+ faces other challenges as well, including Iraq’s signal for higher quotas and the United Arab Emirates’ exit from the group in late April. The seven remaining producers are boosting output as part of a phased rollback of a 1.65 million bpd supply cut agreed upon in 2023. From August, they will have about 379,000 bpd to return to the market, according to Reuters calculations.