OPEC+ ministers have agreed to increase oil production quotas by a total of 188,000 barrels per day for July, in a move analysts say is unlikely to significantly affect global prices amid ongoing geopolitical tensions in the Middle East.
The decision was reached on Sunday during a virtual meeting of oil ministers from key OPEC+ members, including Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman, according to a statement from the organisation.
The increase mirrors previous monthly adjustments under the group’s gradual output policy.
In its statement, OPEC+ said the latest adjustment was aimed at “supporting oil market stability,” while also allowing participating countries to “accelerate their compensation” amid historically high oil prices.
It added that the seven participating nations reaffirmed the need for a cautious and flexible approach, retaining the option to increase, pause, or reverse voluntary production adjustments announced in November 2023.
Despite the decision, analysts said the move is largely symbolic in the current market environment.
Jorge Leon of Rystad Energy said ahead of the announcement that the increase “means very little while the Strait of Hormuz remains closed.”
“The market is not short of quota announcements; it is short of physical barrels that can actually move. In that sense, the 188,000 barrels per day increase would be more of a policy signal than a real supply boost,” he said.
Leon noted that OPEC+ remains cautious amid uncertainty over the Middle East conflict and potential disruptions to key shipping routes such as the Strait of Hormuz.
“When the Strait of Hormuz reopens, the market could move very quickly from fear of shortage to fear of surplus,” he said.
He warned that a combination of returning OPEC+ supply, increased US shale output, and weakening demand after a period of high prices could lead to a significant global oversupply.
“Returning OPEC+ supply, a stronger US shale response and weaker demand after a period of very high prices could leave the market with a very large oversupply problem,” he added.
AFP
