The Organization of the Petroleum Exporting Countries and its allies (OPEC+) has approved another increase in oil production for July, raising output targets by 188,000 barrels per day (bpd) as the alliance continues efforts to gradually unwind voluntary supply cuts introduced in 2023.
The decision was announced following the group’s virtual meeting held on Sunday and marks the fourth consecutive monthly increase in production quotas despite persistent supply disruptions linked to the ongoing United States-Iran conflict and reduced crude exports through the Strait of Hormuz.
In a statement issued after the meeting, the seven participating OPEC+ countries said the July production adjustment forms part of the phased reversal of the 1.65 million bpd voluntary output reductions agreed in April 2023 to support market stability.
The alliance noted that the additional volumes could be adjusted depending on prevailing market conditions.
“The countries will continue to closely monitor and assess market conditions, and in their continuous efforts to support market stability, they reaffirmed the importance of adopting a cautious approach and retaining full flexibility to increase, pause or reverse the phase out of the voluntary production adjustments,” the group stated.
The latest increase mirrors the 188,000 bpd boost approved for June but is lower than the 206,000 bpd monthly increments implemented in April and May following the departure of the United Arab Emirates from OPEC.
Despite the higher production targets, actual OPEC+ output remains significantly below quota levels as several member states continue to grapple with geopolitical tensions, logistical bottlenecks, and export constraints across the Middle East.
The production increase comes against the backdrop of a severe supply squeeze caused by disruptions to crude shipments through the Strait of Hormuz, one of the world’s most strategic oil transit routes.
The conflict between the United States and Iran has affected exports from key Gulf producers, including Saudi Arabia, limiting their ability to meet international demand since late February.
Latest OPEC data show that the group’s crude oil production averaged approximately 33.19 million barrels per day in April, a sharp decline from 42.77 million barrels per day recorded in February. The figures highlight the widening gap between official production targets and actual supply levels.
Market observers say the exit of the United Arab Emirates after nearly six decades of membership has added another layer of complexity to OPEC+’s efforts to manage production and balance global oil supplies.
Meanwhile, oil prices have remained highly volatile amid geopolitical uncertainty.
Brent crude, which surged from about $72 per barrel before the outbreak of hostilities between Washington and Tehran, retreated to around $93 per barrel on Friday as traders grew more optimistic that the conflict would not escalate into a wider regional war.
READ ALSO:Court declares National Assembly’s N110bn vehicle, allowance scheme unlawful
Analysts believe OPEC+’s latest decision reflects a delicate balancing act between supporting market stability and ensuring adequate supply to meet global energy demand amid an increasingly uncertain geopolitical environment.
The seven participating countries are expected to continue reviewing market developments closely in the coming months as they gradually phase out voluntary production cuts while maintaining the flexibility to respond to changing supply and demand dynamics.
