OPEC+ raises August production target as oil market stabilises

London: OPEC+ has agreed to raise oil production targets by 188,000 barrels per day (bpd) from August, adding further supply to the market as crude prices retreat and exports through the Strait of Hormuz gradually recover.

The decision, announced following an online meeting on Sunday, follows similar output increases approved for June and July.

The seven core members of OPEC+, comprising OPEC producers and allies including Russia, have increased output quotas by nearly 800,000 bpd between April and July as part of a phased rollback of earlier production cuts.

Production begins to recover

Despite the quota increases, actual production gains have been limited by the conflict involving Iran, which disrupted tanker traffic through the Strait of Hormuz, a vital export route for major producers including Saudi Arabia, Kuwait and Iraq.

According to OPEC data, the group's output fell to 33.13 million bpd in May, down from 42.77 million bpd in February. Production began recovering in June as exports from Gulf producers resumed, although output remains below pre-conflict levels.

Oil prices have also fallen back to levels seen before the conflict, weighed down by weaker Chinese crude imports, higher exports from producers outside the Middle East and coordinated releases from strategic oil reserves.

"The group of seven kept unwinding their production cuts as widely expected," said Giovanni Staunovo, analyst at UBS. "The near-term focus will remain on how many tankers manage to cross the Strait of Hormuz and how quickly demand and Chinese crude imports recover."

A memorandum of understanding between Washington and Tehran aimed at ending the conflict has also improved market confidence that global oil supplies will eventually normalise.

Prices retreat from highs

Brent crude traded near US$72 per barrel on Friday, down sharply from recent peaks above US$120 per barrel and close to levels seen before the escalation of military tensions earlier this year.