Countries of OPEC+ agreed to boost oil production in July.
Bringing Back the Crude: OPEC+ Oil Production Quotas Revised
According to Interfax, OPEC+ countries have recently made some adjustments to their oil production quotas. A press release from OPEC indicates that these changes were made amidst a stable global economy and robust market factors, as reflected in low commercial stocks of oil.
In their meeting, OPEC+ countries stated that an expedited increase in quotas would provide participating nations the opportunity to swiftly offset previous overproduction. They reaffirmed their commitment to fully compensate for any underproduced volumes.
The next discussion on the quotas, set for August, has been scheduled for July 6th.
Earlier, Saudi Arabia, Russia, Kazakhstan, the United Arab Emirates, Iraq, Oman, Kuwait, and Algeria had voluntarily reduced their production by 2.2 million barrels per day (bpd). However, from April 2025, they planned to gradually ease these restrictions through October 2026 at a rate of approximately 130-140,000 bpd. Yet, since May, they deviated from this plan.
A Flexible Approach to Oil Markets
These planned increases are designed to be adaptable. OPEC+ emphasizes that production increases may be temporarily halted or reversed based on market developments, helping them maintain oil market stability.
Participating countries are also focused on achieving complete conformity with their production limits and making up for any underproduced volumes since January 2024.
Despite the planned increases, May's output fell below the full increase, with members such as Iraq, the UAE, and Russia voluntarily reducing their output to compensate for past quota breaches. Meanwhile, Kazakhstan exceeded its quota, contributing to an overall production level of around 400,000 bpd above the target for May.
Market Forces and Strategic Impacts
Saudi Arabia is determined to hasten the restoration of output to recoup lost market share during previous cuts and apply pressure on higher-cost producers, including US shale.
The policy aims to balance market stability while gradually increasing supply to meet demand without triggering excessive price volatility.
Monthly meetings will be held to assess market conditions and adjust production levels accordingly, with the next one scheduled for July 6, 2025, to determine the August production levels.
As the OPEC+ countries adapt their oil production quotas to fit market conditions, they are also making efforts to achieve complete conformity with these production limits, aiming to compensate for any underproduced volumes since January 2024. In a strategic move, these increases are intended to be flexible and adaptable, allowing for temporary halts or reversals based on market developments, thus maintaining oil market stability.
