OPEC+ has a preliminary agreement for another modest oil quota increase in August, delegates said, raising the prospect of more supply eventually hitting the market again if a US-Iran peace pact can stick.
If ratified at a video conference on Sunday, seven major nations led by Saudi Arabia and Russia will add 188,000 barrels a day to their output target, the delegates said.
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It would be in keeping with the group's plan to finish reversing output curbs made a few years ago. The tiny on-paper hikes are starting to add up: it will mean they've added 940,000 barrels a day to quotas, equivalent to almost 1% of global demand, since the war began.
Those increases have so far been theoretical because the war blocked the Strait of Hormuz and stopped Persian Gulf members from ramping up exports and output. However, since an interim peace pact between Tehran and Washington, the Saudis and their neighbors have started to restore shipments, helping drive a surplus in key Asian markets.
Oil futures have tumbled 43% from their war-time peak to near $72 a barrel in London, and with some forecasters predicting the re-emergence of a global glut, OPEC and its partners could soon face a choice between restraining output or fighting over market share — a potential price war.
The Organization of the Petroleum Exporting Countries is already facing a challenge to its unity, after founding member Iraq last month suggested it could ultimately exit if denied a higher production limit.
The United Arab Emirates quit the organization in May over similar frustrations with OPEC's mandated output limits. Abu Dhabi has significant production capacity idled by the war to restart, and with ambitions to add more over time, could add pressure to prices and its former alliance counterparts.
Saudi Arabia and the UAE have restored oil exports to near pre-war levels, tanker-tracking data shows, thanks to both the peace accord and their success in getting cargoes through Hormuz. Still, their production levels remain well below normal rates, according to data compiled by Bloomberg.
In May, Bloomberg reported that OPEC+ had a roadmap to continue its series of quota increases through September, thereby completing the restoration of two layers of production halted back in 2023. An increase for August would mark the penultimate month in that process.
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A third and final tranche of curbs is scheduled to remain in place until the end of the year, though some delegates said last month that its restart could be fast-tracked.
Even before Hormuz was closed, many members were struggling to pump as much as allowed due to physical capacity constraints, and so only part of this third tier would likely materialize.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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