OPEC+ raises output quotas by 188,000 bpd for July

OPEC+ ministers decided Sunday to increase oil quotas by a total of 188,000 barrels per day for July, in a move analysts said would be unlikely to have an impact on prices sent higher by the Mideast war.

Jorge Leon, analyst at Rystad Energy, said ahead of the expected increase that it “means very little while the Strait of Hormuz remains closed”.

He added: “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.”

The hiked production output was agreed on Sunday in a video meeting of oil ministers from key OPEC+ countries Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman, a statement from the organisation said.

The increase was similar to ones decided in previous months.

The OPEC+ statement said the latest agreed hike was “to support oil market stability” but that the seven countries also saw an opportunity “to accelerate their compensation” in a time of historically high oil prices.

It added that the ministers “reaffirmed the importance of adopting a cautious approach and retaining full flexibility to increase, pause or reverse the phase-out of the voluntary production adjustments, including reversing the previously implemented voluntary adjustments announced in November 2023”.

“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 said.