Opec+ makes small quota hike to finish unwinding 2023 oil cuts
Seven members have agreed to boost their collective target by a further 188,000 barrels a day
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MAJOR Opec+ nations approved the latest small increase to their production quotas, a move that will complete the theoretical revival of supplies halted in 2023 and give them scope to add more barrels once the Middle East war ends.
Seven members led by Saudi Arabia and Russia agreed to boost their collective target by a further 188,000 barrels a day next month, the group said following a video call on Sunday (Aug 2).
The group has raised quotas each month throughout the Iran war even as supply from the region remains constrained by the conflict. Successive hikes over most of this year, however, have remained largely on paper with little impact on the market.
Bloomberg earlier reported that Opec+ currently plans to hold levels steady for the rest of 2026 after the September hike. The 21-member group comprises Opec, along with Russia and other allies.
The hike finishes the phased rollback of a 1.65 million barrels-per-day supply cut originally agreed on in 2023, when the group still included the United Arab Emirates, which left in May.
While the increase is symbolic for now, it may give Saudi Arabia leeway to raise production once oil flows from the Persian Gulf return to normal, helping to replenish the world’s depleted stockpiles.
A supply squeeze triggered by conflict is pushing up the cost of fuels such as petrol and diesel, stoking fears of another spike in inflation.
US President Donald Trump said over the weekend that the US will hold off on new strikes against Iran after the Islamic Republic and other Middle Eastern nations told him they were working towards a deal.
An eventual supply boost by Opec and its partners could help to rekindle warnings of a mounting surplus that emerged during last month’s ceasefire between the US and Iran.
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Although Opec+ sources said before the meeting that the group would likely pause output increases for the fourth quarter, it made no reference in a statement as to what might be agreed for the last three months of 2026.
A pause was still a feasible option, said Jorge Leon, an analyst at Rystad.
“Opec+ has finished unwinding its voluntary cuts. The next challenge is managing the surplus that could emerge as export flows normalise,” he said.
“Having completed the restoration campaign, Opec+ has little incentive to rush into further supply changes. Our base case is a fourth-quarter pause while the group prepares for the 2027 quota negotiations.”
The UAE’s exit from the group, following years of frustration with Opec-imposed limits, has also spurred speculation that the group could one day be plunged into a contest over market share.
The group will continue to hold monthly meetings, with the next one scheduled for Sep 6.
A separate Opec+ meeting of a panel called the Joint Ministerial Monitoring Committee also met, Opec said on Sunday.
The panel reiterated concern about attacks on energy assets during the US-Israeli war on Iran, saying they were expensive and time-consuming to repair and so have an impact on supply.
With September’s output hike now agreed, Opec+ still has in place one more layer of output cuts that apply to most of the group’s members. Those roughly two million barrels per day in cuts date back to 2022 and are due to remain in place until the end of this year.
Opec+ is carrying out a review of its members’ oil production capacity that will be used for the 2027 output baselines from which quotas are set.
It faces potentially difficult talks over new production quotas, with some members, including Iraq, pushing for higher individual quotas to reflect their higher capacity. BLOOMBERG, REUTERS
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