OPEC+ producers likely to raise oil output again from August

LONDON: OPEC+ producers are expected to approve another increase in oil output targets from August when they meet on Sunday, according to three sources, as the group continues to restore supply while prices remain under pressure.

The planned increase is likely to be around 188,000 barrels per day for August, the same level agreed for June and July, the sources said.

No final decision has been made. OPEC did not immediately respond to a request for comment.

Seven core OPEC+ members, including Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman, have increased output quotas by nearly 800,000 barrels per day from April to July.

The increases are part of a phased rollback of a 1.65 million barrels per day supply cut agreed in 2023, when the United Arab Emirates was still part of the alliance.

The UAE left the group in late April after seeking to align its production more closely with capacity, without output limits imposed by OPEC+.

From August, the seven producers will still have about 379,000 barrels per day of the original cut left to return to the market, after accounting for the UAE’s exit from May 1, according to Reuters calculations.

If they continue at the same pace, the remaining cut could be unwound by the end of September.

The expected increase comes as oil prices have fallen back to pre-war levels.

Brent crude was trading slightly above $72 a barrel by 1309 GMT, weighed down by weaker Chinese imports, higher exports from producers outside the Middle East, a record strategic stock release coordinated by the International Energy Agency, and a U.S.-Iran memorandum of understanding to end the war.

The gradual reopening of the Strait of Hormuz has also eased supply concerns.

Despite the planned quota increases, the Iran war caused a sharp decline in production among key members. OPEC+ output fell to 33.13 million barrels per day in May, compared with 42.77 million barrels per day in February, according to OPEC data.

The meeting also comes amid renewed pressure from Iraq over production limits.

Last week, sources said Iraq, OPEC’s second-largest producer after Saudi Arabia and one of the group’s five founding members, had considered leaving the organisation if it was not allowed to raise production significantly.

Officials in Baghdad later said Iraq supported a reassessment of OPEC production quotas to better reflect the conditions of member states.

OPEC+ is currently reviewing members’ oil production capacity, which will be used as a reference for 2027 production baselines from which future quotas are set.