OPEC+ Ends Rollback of Voluntary Output Cuts, Approves Additional 188,000 Bpd

The Organization of the Petroleum Exporting Countries and its allies (OPEC+) has approved an additional increase in crude oil production for September, marking the completion of the phased reversal of voluntary output cuts initiated in 2023. The alliance agreed to raise production quotas by approximately 188,000 barrels per day for its core producers, including Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan, and Oman.

This latest increase signifies the full unwinding of the 1.65 million barrels per day voluntary production cut that was implemented in 2023 to bolster the oil market. The United Arab Emirates, previously part of this arrangement, exited OPEC in May. Despite consistent monthly output increases throughout the year, the additional supplies have had a limited effect on the global market. This is attributed to export disruptions affecting producers in the Gulf, Russia, and Kazakhstan, stemming from ongoing conflicts involving Iran and Ukraine.

While market observers had anticipated a pause in production increases for the final quarter of the year, the official communiqué from OPEC+ made no mention of plans for October through December. The group will now focus on managing potential surpluses that could arise once export flows normalize. It is highly probable that the alliance will pause output adjustments in the fourth quarter as it prepares for negotiations on production quotas for 2027.

Following the meeting, oil prices saw an increase. Brent crude, Nigeria's benchmark, settled at $90.12 per barrel, while US West Texas Intermediate (WTI) crude closed at $84.67 per barrel. Both benchmarks gained over one percent, reversing a more than 5 percent drop from the previous week, which was influenced by expectations of easing tensions in the Middle East. The Joint Ministerial Monitoring Committee also expressed concern over attacks on energy infrastructure amidst military operations against Iran, warning of potential impacts on global oil supplies.