OPEC+ has reached a preliminary agreement to raise oil production quotas by 188,000 barrels per day (b/d) in August, delegates told Bloomberg. The increase, if ratified at a video conference on Sunday, would continue the group's plan to reverse output curbs imposed in 2023.
"Since the war began, they've added 940,000 barrels a day to quotas — equivalent to almost 1 per cent of global demand," delegates said, according to Bloomberg. The August increase is part of restoring two layers of production halted in 2023, with a final boost expected in September.
Supply Dynamics and Geopolitical Context
The 188,000 b/d hike would be implemented by seven major nations led by Saudi Arabia and Russia. Previously announced increases had been largely theoretical because the war blocked the Strait of Hormuz, preventing Persian Gulf members from ramping up exports. However, an interim peace pact between Tehran and Washington has enabled Saudi Arabia and the UAE to restore shipments to near pre-war levels, according to tanker-tracking data compiled by Bloomberg. This restored flow has contributed to a surplus in key Asian markets and erased oil's war-time rally.
Market Implications and Internal Strains
The restored supply is setting the stage for a contest among OPEC nations for customers. The group's unity has already been challenged: Iraq, a founding member, last month suggested it could exit if denied a higher production limit, and the UAE quit the organization in May. Despite restoring exports, Saudi Arabia and the UAE still have production levels well below normal rates, Bloomberg data shows.
Production Restoration Timeline
The August increase marks the penultimate step in restoring two layers of production halted in 2023. A final increase in September would complete that series. A third and final tranche of curbs remains scheduled to stay in place until the end of the year. However, due to physical capacity constraints, many members were already struggling to pump their full quotas even before the Strait of Hormuz closure, so only part of this third tier is likely to materialize, delegates indicated.
| Milestone | Volume | Timing | Status |
|---|---|---|---|
| August increase | 188,000 b/d | August 2026 | Preliminary agreement |
| Total additions since war began | 940,000 b/d | Multiple months | Implemented/planned |
| Restoration of first two layers | 188,000 b/d each step | Aug-Sep 2026 | Penultimate month; final in Sep |
| Third tranche of curbs | Not specified | Until end 2026 | Remains, partial realization expected |
For Commodity Traders and Analysts
The resolution of the Strait of Hormuz blockage and the return of Persian Gulf supply are shifting the fundamental outlook for crude oil. With Asian markets already showing surplus, further increases could pressure prices, especially if OPEC+ members compete for market share. Traders should watch for the formal ratification on Sunday and monitor compliance levels among members, especially Iraq and the UAE, whose grievances threaten long-term cohesion. The capacity constraints of several producers suggest that actual additional supply may be less than the quota increases, but the direction of supply growth is clear.
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