Russia and Saudi Arabia will be able to increase oil production in July by 62,000 b/d each compared to June, reaching 9.82 million and 10.35 million b/d respectively. The quota for Iraq is raised by 26,000 b/d to 4.37 million b/d, for Kuwait by 16,000 b/d to 2.64 million b/d, for Kazakhstan by 10,000 b/d to 1.6 million b/d, for Algeria by 6,000 b/d to 995,000 b/d, and for Oman by 5,000 b/d to 831,000 b/d.
These figures do not take into account the timeline for compensating previously allowed overproduction. OPEC+ states that the compensation period has been extended until the end of December 2026.
As noted in the OPEC+ statement, the member countries will continue to monitor and assess market conditions, reaffirming the importance of a cautious approach and maintaining full flexibility regarding increases, suspensions, or cancellations of voluntary production adjustments.
August quotas will be determined at the OPEC+ meeting on July 5.
Andrei Polishchuk, a senior analyst for the oil, gas, and transportation sectors at Euler, believes that the easing of restrictions will proceed at a similar pace until September. "After that, a pause is possible, and the cartel may return to reducing restrictions in 2027 if demand growth expectations are confirmed," he says. According to Argus, if OPEC+ countries continue to increase quotas at the current pace, they will complete the reduction of the last package of voluntary restrictions by September.
Argus indicates that the decisions to increase production targets remain more of a "theoretical exercise" for Saudi Arabia, Iraq, and Kuwait, who had to cut production due to the conflict in the Middle East and the closure of the Strait of Hormuz. The agency's source noted that the lifting of restrictions should be viewed as groundwork for boosting production by these countries after the strait reopens.
According to Argus estimates, in May, the total oil production of OPEC+ countries amounted to 29.53 million b/d, which is 9.6 million b/d lower than before the onset of military actions in the Middle East, primarily due to reductions in Gulf countries.
For example, according to Argus, oil production in Saudi Arabia increased by 250,000 b/d in May compared to April, reaching 6.57 million b/d, but remained 3.66 million b/d below the target level. In Iran, production dropped by 300,000 b/d to 2.65 million b/d. Production in Russia remained at 9 million b/d, according to Argus.
Sergiy Tereshkin, CEO of Open Oil Market, believes that the increased production cap will allow OPEC+ countries to expand supply after the reopening of the Strait of Hormuz without destabilizing the market, as the production growth will fit within the previously announced frameworks. "Overall, such a strategy is quite rational: it will enable future market share growth without shocks, similar to what happened in March 2020 during the initial collapse of the deal," he says. In that year, Russia announced its exit from the OPEC+ deal effective April 1, and a new agreement was reached on May 1.
Financial University expert Igor Yushkov also believes that raising quotas to levels that do not constrain anyone will help avoid shocks to the market in the future, especially after the reopening of the Strait of Hormuz, when prices may naturally drop. Russia, the expert notes, has been unable to meet its quotas for several months due to a lack of investment in the sector and attacks on infrastructure, so a return to production above 9 million b/d would be seen as a good result.
Source: Kommersant
