OPEC+ boosts oil production as Gulf exports recover

Seven OPEC+ producers have agreed to increase oil production from August, signalling confidence that Gulf exports are recovering after months of disruption caused by the Middle East conflict. The move comes as shipping through the Strait of Hormuz gradually returns to normal.

Seven key OPEC+ members agreed on Sunday to raise oil production quotas by 188,000 barrels per day, with the increase taking effect in August 2026.

The decision was reached during a virtual meeting involving Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman, as the alliance seeks to restore supplies following months of reduced output linked to the conflict in the Gulf.

Recovery follows Hormuz disruption

The production increase comes after Gulf producers were forced to scale back exports when shipping through the Strait of Hormuz was severely disrupted during the Middle East war.

According to OPEC data, combined oil production by Saudi Arabia, Iraq and Kuwait fell by around six million barrels per day between the first quarter of 2026 and May.

A memorandum of understanding signed by Iran and the United States on June 17 has since helped restore maritime traffic through the strategic waterway, allowing exports to gradually recover.

Output still below target

Despite improving shipping conditions, analysts say production has yet to return to pre-conflict levels.

UBS commodity analyst Giovanni Staunovo said current output remains below OPEC+ targets, while Ole Hansen of Saxo Bank noted that restarting oil fields shut during the conflict is a gradual process that could take several weeks.

As a result, July is expected to show modest gains, with a stronger recovery anticipated in August.

Price risks remain

While rebuilding depleted inventories could initially absorb the additional supply, analysts warn that oil markets may face a surplus in 2027, increasing downward pressure on prices.

The challenge comes at a sensitive time for OPEC+, which is adjusting to the departure of the United Arab Emirates from the group and preparing for a review of members' production baselines later this year.

Quota debate looms

Iraq has already called for higher production quotas to offset losses suffered during the Gulf conflict.

Although analysts believe an immediate increase is unlikely, the request is expected to feature prominently during OPEC+'s 2027 capacity review, when the alliance reassesses production limits based on each member's output potential.