Russia and Saudi Arabia will each be able to increase oil production in July by 62,000 bpd compared to June, reaching 9.82 million and 10.35 million bpd, respectively. The quota for Iraq is raised by 26,000 bpd to 4.37 million bpd, while Kuwait's quota increases by 16,000 bpd to 2.64 million bpd. Kazakhstan's quota rises by 10,000 bpd to 1.6 million bpd, Algeria's by 6,000 bpd to 995,000 bpd, and Oman's by 5,000 bpd to 831,000 bpd.
These figures do not account for the compensation schedule for previously allowed overproduction. OPEC+'s statement indicates that the compensation period has been extended until the end of December 2026.
As noted in OPEC+'s announcement, the member countries of the alliance will continue to monitor and evaluate 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 and gas and transport sectors at Euler, believes that the easing of restrictions will continue at the same 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 states. As highlighted by Argus, if OPEC+ countries continue to increase quotas at the current pace, the last package of voluntary restrictions could end by September.
According to Argus, decisions to increase production targets remain more of a "theoretical exercise" for Saudi Arabia, Iraq, and Kuwait, which have had to cut production due to conflicts in the Middle East and the closure of the Strait of Hormuz. An agency source noted that lifting restrictions should be viewed as groundwork for increasing production by these countries following the opening of the strait.
Argus estimates that in May, the total oil production of OPEC+ countries was 29.53 million bpd, which is 9.6 million bpd lower than before the onset of military actions in the Middle East, primarily due to reductions in Gulf countries.
According to Argus, Saudi Arabia's oil output in May rose by 250,000 bpd to 6.57 million bpd compared to April, but remained 3.66 million bpd below its target. In Iran, production fell by 300,000 bpd to 2.65 million bpd. Russia's production remained at 9 million bpd according to Argus.
Sergey Tereshkin, CEO of Open Oil Market, states that the increase in the production cap will allow OPEC+ countries to boost supply after the opening of the Strait of Hormuz without destabilizing the market, as the production increase will align with pre-announced parameters. "Overall, this strategy is quite rational: it will enable future market share growth without shocks similar to those experienced in March 2020 during the first collapse of the deal," he explains. In that year, Russia announced its exit from the OPEC+ deal effective April 1, with a new agreement reached from May 1.
Igor Yushkov, an expert at the Financial University, also believes that raising quotas to levels that do not impose restrictions on anyone helps to avoid market shocks in the future, especially after the opening of the Strait of Hormuz when prices may naturally decline. The expert notes that Russia has not met its quotas for several months due to a lack of investment in the sector and attacks on infrastructure, so a return to production levels above 9 million bpd would be a positive result.
Source: Kommersant
