The oil production alliance “OPEC+” announced on Sunday (August 2) that it will increase its daily crude oil production quota by approximately 188,000 barrels starting from September. The alliance also stated that this move will fully lift the phased voluntary production cuts implemented by its core member countries since 2023.
On Sunday, the core member countries of the alliance, consisting of 7 major oil-producing countries, reached a consensus during a video conference to increase the daily production quota by an additional 188,000 barrels starting from September. This is a further step taken by the oil-producing alliance after three consecutive months of similar production quota increases.
The 7 core member countries of OPEC+ – Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan, and Oman – reached the agreement to increase production in September. According to the voluntary production cut plan reached in 2023, the 8 core countries would daily reduce production by 1.65 million barrels of crude oil. The agreement was signed when the alliance also included the UAE, but the country withdrew from OPEC this May.
“OPEC+” currently has 21 member countries, including the 11 member countries of the Organization of the Petroleum Exporting Countries (OPEC), including Iran, and 11 non-OPEC oil-producing countries like Russia.
Market analysts suggest that this signifies the alliance has completed its phased exit from the 2023 voluntary production cut plan. The new measures will provide OPEC+ with more room to increase crude oil supply after the end of the Iran conflict. However, despite announcing production increases for several consecutive months this year, the actual impact on the market has been limited mainly due to ongoing disruption in crude oil exports from the Gulf region, Russia, and Kazakhstan caused by the Iran and Ukraine conflicts.
According to OPEC data, in May this year, OPEC+ reduced daily oil production from 42.77 million barrels in February to 33.13 million barrels. With the assistance from the US, OPEC+ members and the UAE exported more oil in June, leading to a recovery in OPEC+’s oil production, though still below levels before the Iran conflict.
The Organization of the Petroleum Exporting Countries stated that on Sunday, the Joint Ministerial Monitoring Committee (JMMC) of OPEC+ held an additional meeting, restating concerns about potential attacks on energy assets of the alliance during the US-Iran conflict, noting that the repair of these assets is costly and time-consuming, which could affect oil supply.
Following the end of the voluntary production cuts, the 7 core countries responsible for managing OPEC+ monthly production levels will continue to hold monthly meetings, with the next meeting scheduled for September 6th.