OPEC+ members, including Saudi Arabia and Russia, are expected to approve another oil production increase of 188,000 barrels per day (bpd) for August, continuing the gradual unwinding of production cuts. This move comes as the Middle East calms and ship transport in the region, particularly through the Strait of Hormuz, shows signs of recovery after disruptions caused by the recent war. Oil prices have dropped to pre-war levels in anticipation of a return to normal, with oil supplies through the Strait potentially exceeding 10 million bpd, though restarting shut-in production will take time.
While the increase is largely symbolic as production still lags behind targets, it reflects an improving outlook. Seven OPEC+ members are anticipated to raise their quotas, aiming to recover from disruptions that led Gulf countries to cut output by approximately 6 million bpd between the first quarter of 2026 and May. A memorandum of understanding between Tehran and Washington in June committed to removing obstacles to maritime traffic in the Strait of Hormuz, accelerating the recovery of regional oil flows.
Despite the recovery, there are challenges ahead for OPEC+. Analysts like Jorge Leon of Rystad Energy anticipate a market surplus in 2027. While rebuilding global inventories will initially absorb increased flows, producers may face downward pressure on prices later. The group, already impacted by the UAE's departure in May, will need to manage sliding prices while members like Iraq push for higher production quotas, though this may not be immediately feasible as production levels are still below pre-conflict levels. Output baselines will be re-examined at the end of the year, which could be a contentious issue for the cartel.
