Seven OPEC+ members decided on Sunday to raise oil production quotas by 188,000 barrels per day, effective August 2026, as Gulf countries recover from disruptions caused by the Middle East war. The decision was made during a virtual meeting of ministers from Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman.
Background of Production Cuts
Gulf countries had significantly reduced output after Iran's near-paralysis of the Strait of Hormuz during the conflict, which blocked oil exports for several months. Between the first quarter of 2026 and May, combined production by Saudi Arabia, Iraq, and Kuwait fell by approximately six million barrels per day, according to OPEC data.
Easing of Tensions
On June 17, Tehran and Washington signed a memorandum of understanding committing to remove obstacles to maritime traffic in the Strait of Hormuz during ongoing talks. Since then, shipping has slowly recovered, and oil prices have dropped sharply to pre-war levels. Oil supplies through the strait may have already exceeded ten million barrels per day, according to a U.S. official quoted by Bloomberg.
Analyst Perspectives
Giovanni Staunovo, a commodity analyst at UBS, told AFP that “for now, production is probably still below” OPEC+’s targets. Saxo Bank analyst Ole Hansen noted that “shut-in production takes time to restart” and that oil currently leaving the strait has been from tankers or storage. “Assuming shipping continues to normalize, July will show an improvement, with August probably being the month where the pickup accelerates,” Hansen said.
Future Challenges
Jorge Leon, an analyst at Rystad Energy, told AFP that “for next year, everybody is anticipating a surplus.” Rebuilding inventories tapped during the conflict may initially absorb flows, but producers could face strong downward pressure on prices. OPEC+, already weakened by the UAE's departure in May, must manage sliding prices while members push for increases. Iraq has requested higher quotas to compensate for its war-related shortfall, but Hansen said the need “is not imminent” as production remains far from pre-conflict levels.
