OPEC+ increases oil production quotas for fifth consecutive month

OPEC+ member states decided to modestly boost oil production quotas for next month, responding to declining prices that followed the US-Israel attack on Iran. Seven countries—Algeria, Iraq, Kazakhstan, Russia, Kuwait, Oman, and Saudi Arabia—will raise the collective quota by 188,000 barrels per day in August. This is the fifth consecutive monthly increase, with previous adjustments of similar magnitude.

Oil prices have dropped over the past month to levels seen before the US-Israel military strike on Iran in late February. Market optimism grew after the US and Iran reached a temporary agreement to end hostilities. Under the memorandum of understanding, Iran agreed to allow unhindered passage for ships through the Strait of Hormuz, while the US agreed to lift its blockade of Iranian ports. Since then, more commercial vessels have transited the strait, which before the war carried about one-fifth of the world's oil. However, traffic has not yet returned to pre-war levels, and tensions over the waterway persist. Iran's Joint Military Command warned on Thursday that oil tankers must use only its approved routes or face a "strong response."

Oil prices continue to fall as Iranian and US delegations work to finalize a peace treaty. Brent crude is trading around $72 per barrel, close to the price before the attack and well below the March peak of nearly $120. The war triggered a global energy crisis, as most shipping through the Strait of Hormuz was blocked. Previous OPEC+ production increases failed to compensate for disruptions to global supplies. At the war's start, many major Middle Eastern producers had to cut output due to transportation issues. S&P Global Energy estimates that oil production in the Persian Gulf will not fully recover until at least the first quarter of 2027. Energy experts warn that fuel and consumer goods prices are likely to remain elevated long after the conflict ends.