OPEC+ Set To Extend Oil Output Increase In August

Saudi Arabia, Russia and five other members of the expanded OPEC+ alliance are set to meet online on Sunday to decide August production quotas, with analysts expecting the group to continue its gradual output increase while broader market and internal challenges remain.

OPEC+ Likely To Continue Planned Output Increase

Analysts at UBS expect OPEC+ to raise production by around 188,000 barrels per day in August, maintaining the same pace of monthly increases adopted in recent months as the alliance continues to gradually unwind previous output cuts.

Despite the planned increase, actual production is expected to remain below the group's target levels for now.

Earlier this year, Iran's blockade of the Strait of Hormuz during the Middle East conflict severely disrupted oil exports from Gulf producers for months, forcing major exporters to sharply reduce production.

According to OPEC data, the combined daily output of Saudi Arabia, Iraq and Kuwait — three of the seven countries seeking higher production quotas — fell by around 6 million barrels per day between the first quarter of 2026 and May.

U.S.-Iran Memorandum Drives Oil Prices Back To Pre-War Levels

On June 17, Tehran and Washington signed a memorandum of understanding committing both sides to work toward removing obstacles to maritime traffic through the Strait of Hormuz during negotiations following the agreement.

Signs of recovering shipping activity have since emerged in the region. As expectations grow that conditions will gradually normalize, global oil prices have fallen sharply, returning to levels comparable to those seen before the conflict.

Restarting Production Expected To Take Time

Bloomberg, citing a U.S. official, reported that oil flows through the Strait of Hormuz may have exceeded 10 million barrels per day once again.

However, analysts at Saxo Bank said much of the oil currently leaving the strait had previously been stored in tankers or storage facilities, while production shut in during the conflict requires time to restart.

Assuming maritime traffic continues to normalize, supply conditions are expected to improve during July, with August likely to become the month when production recovery accelerates.

Internal Unity Faces Growing Pressure

Analysts broadly expect the global oil market to move into surplus next year.

Replenishing inventories that were drawn down during the conflict should initially help absorb additional supply. Over time, however, oil-producing countries may face mounting downward pressure on prices.

The alliance has also faced additional strain following the United Arab Emirates' departure in May. As prices come under pressure, OPEC+ must balance market stability with continued demands from member states for higher production.

Iraq's Oil Ministry said in late June that it was urging the alliance to increase its production quota to offset output losses suffered during the Middle East conflict.

Analysts said, however, that the request is not considered urgent because actual production remains well below pre-conflict levels. Iraq's proposal could instead become part of the alliance's 2027 capacity assessment, when members' production baselines will be reviewed.

OPEC+ is scheduled to reassess production quotas later this year based on each member's capacity to increase output, a process widely expected to become one of the alliance's most challenging issues.