OPEC+ raises quotas again as Middle East calms

Seven OPEC+ members, including key players Saudi Arabia and Russia, have decided to raise their oil production quotas by 188,000 barrels per day, effective August 2026. The decision comes as the Middle East conflict de-escalates and maritime traffic in the Strait of Hormuz normalizes.

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for now, production is probably still below

Gulf countries, particularly Saudi Arabia, Iraq, and Kuwait, significantly cut output after Iran's actions nearly paralyzed the Strait of Hormuz, blocking oil exports for months. Production from these three nations alone fell by approximately six million barrels per day between the first quarter of 2026 and May. However, a recent memorandum of understanding signed between Tehran and Washington on June 17 aims to facilitate maritime traffic, paving the way for increased exports.

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shut-in production takes time to restart

Commodity analysts suggest that while shipping has slowly recovered, restarting shut-in production takes time. Giovanni Staunovo of UBS noted that current production is likely still below OPEC+ targets. Ole Hansen of Saxo Bank anticipates July will show improvement, with August seeing an accelerated pickup in output, assuming continued normalization of shipping.

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Assuming shipping continues to normalise, July will show an improvement with August probably being the month where the pickup accelerates

Looking ahead, analysts like Jorge Leon of Rystad Energy foresee a potential oil surplus next year. While rebuilding inventories depleted during the conflict may absorb initial flows, producers could face strong downward pressure on prices. This scenario could test the cohesion of OPEC+, which has already seen the United Arab Emirates depart. Iraq, seeking to compensate for wartime shortfalls, has requested higher quotas, though Hansen suggests this need is not imminent and may be addressed in a 2027 capacity review.

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For next year, everybody is anticipating a surplus