The seven-member subgroup of oil producers under the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) is set to extend a series of output quota hikes by 188,000 barrels per day when they meet on Sunday, July 5.
The small group launched the hikes after the US and Israeli forces struck Iran in late February, setting off the latest war in the Middle East.
According to Reuters, the OPEC+ subgroup, including Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan, and Oman, will likely decide to boost their production quotas for August by another 188,000 barrels daily, after last month agreeing a same-size production boost for July, which, unlike the previous hikes, may actually take place.
OPEC+ has been hiking production almost since the war began, but these hikes have remained on paper as production in the Persian Gulf remained paralysed by the hostilities and Iran’s decision to close the Strait of Hormuz.
This decision forced Gulf producers to stock up after shutting in wells. Iraq was especially hard hit by the Hormuz shutdown, with its production dropping from over 4 million barrels daily to less than 2 million barrels daily while the United Arab Emirates (UAE) started shipping record volumes of crude abroad, right after it quit OPEC.
After six decades as a member, the Emirates decided to reduce the group members to 11 after it pulled out, sparking predictions that they would immediately start boosting production, but for now, the country is only boosting exports.
The Iran war has led to a sharp drop in production among key members, with OPEC+ output dropping to 33.13 million barrels per day in May, according to OPEC data, from 42.77 million barrels per day in February.
Still, oil prices have returned to pre-war levels, pressured by weaker Chinese imports, higher exports from non-Middle East producers, a record strategic stock release coordinated by the International Energy Agency (UAE) and the US-Iran memorandum of understanding to end the war that helped ease supply concerns.
