OPEC+ approves fourth oil output quota hike since Hormuz closure

“When the Strait of Hormuz reopens, the market could move very quickly from fear of shortage to fear of surplus.”

On Friday, oil prices LCOc1 fell to around US$93 a barrel as traders gained confidence that renewed conflict between the US and Iran was growing less likely. Prices were close to US$72 before the war began.

OPEC+ ALMOST DONE WITH UNWINDING 2023 OUTPUT CUT

The seven countries are increasing production as part of the gradual unwinding of a 1.65 million bpd production cut that the group, which at the time included UAE, agreed in 2023.

From July, the seven have about 567,000 bpd of the original cut to return to the market, taking into account the UAE exit from May 1, according to Reuters calculations.

That would mean the rest of the cut will be unwound by the end of September should OPEC+ stick to monthly hikes of about 188,000 bpd for August and September.

The seven of 21 OPEC+ members who met on Sunday are Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia and Oman. In recent years, only the seven plus the UAE, when it was a member, have been involved in the group’s output policy decisions.

In a separate meeting on Sunday of all OPEC+ members, the ministers made no change to group-wide output policy that is in place until the end of 2026, OPEC+ said in another statement.

OPEC+ is carrying out a review of its members’ oil production capacity to be used as a reference for 2027 production baselines, from which quotas are set. The group on Sunday affirmed the importance of completing the assessment, the statement said.