OPEC+ adds to global oil supply with August production hike
OPEC+ has decided to increase its collective production target by 188,000 bpd beginning in August, continuing its gradual supply increases as oil exports through the Strait of Hormuz improve following the US-Iran peace pact.
The decision, which was made during the group's virtual meeting on Sunday, is the most recent phase in the alliance's gradual reversal of the voluntary production reductions that were initially decided upon in 2023.
"In their collective commitment to support oil market stability, the seven participating countries decided to implement a production adjustment of 188 thousand barrels per day from the additional voluntary adjustments announced in April 2023," OPEC+ said in a press statement.
The August increase follows similar quota hikes in June and July, bringing the cumulative increase since April to nearly 800,000 bpd.
This marks the fifth consecutive monthly output increase by OPEC+ producers.
According to a Bloomberg survey, OPEC’s crude production rose by 2.34 million bpd in June to 18.75 million bpd, with strong gains recorded in Kuwait, Saudi Arabia, and Iran.
Easing regional tensions
The increase reflects the gradual resumption of exports as Gulf producers begin more regular shipping via the strait following a cooling of geopolitical conflicts.
Kuwait recorded the largest monthly increase, lifting output by 870,000 bpd to 1.36 million bpd after its production had been cut by around 80% during the conflict.
Saudi Arabia increased production by 550,000 bpd to 7.2 million bpd, while Iran boosted output by 510,000 bpd to 2.85 million bpd, although the country continues to face challenges marketing some of its crude, with significant volumes reportedly stored on tankers at sea.
OPEC's challenges remain
Despite the rebound, OPEC’s production remains well below pre-conflict levels.
June output was still around 7.3 million bpd, or 28%, lower than February production after accounting for the UAE's departure from the organisation in May.
The UAE’s exit has also reshaped the producer landscape, allowing Abu Dhabi to increase production independently once export routes fully normalise.
Meanwhile, Iraq has renewed pressure on the group for higher production quotas, highlighting potential challenges to OPEC’s cohesion.
The production recovery comes at a time when global demand remains mixed.
Decreased crude imports by China, the world’s largest oil importer, have affected the oil market, while higher exports from producers outside the Middle East have added to global supply.
Brent crude has retreated to around $72 per barrel, down sharply from the triple-digit prices seen during the height of the conflict, reflecting expectations that Middle East supplies will continue returning to the market.
Analysts say the immediate focus will remain on the pace of export recovery through the Strait of Hormuz and whether demand, particularly in China, strengthens in the second half of the year.
What's in store for the second half of 2026?
“The group of seven kept unwinding their production cuts as widely expected,” said UBS analyst Giovanni Staunovo.
“The near-term focus will remain on how many tankers will manage to cross the Strait of Hormuz and how quickly demand and Chinese crude imports recover,” Staunovo added.
Following the August increase, the seven core OPEC producers will have only around 379,000 bpd of their original 2023 voluntary cuts left to restore.
If a similar increase is approved at the group’s next meeting in early August, the rollback of those cuts could be completed by September, marking a significant milestone in OPEC+’s post-conflict supply strategy.
