The OPEC+ alliance, made up of the main oil exporting countries and their partners, agreed to increase their production by 188 thousand barrels per day starting August 1. This is the fifth consecutive increase approved this year as part of the plan to gradually reverse the voluntary production cuts applied since 2023 to support international crude oil prices.
More oil on the market
The decision was adopted by Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman during a virtual meeting. The increase is identical to that approved in previous months and responds to the group’s commitment to return to the market part of the oil withdrawn in recent years, always with the declared objective of maintaining the stability of the energy market.
In recent months, the conflict in the Middle East and difficulties transporting oil through the Strait of Hormuz limited the impact of those increases, as several producers involuntarily reduced their production. However, the partial recovery of maritime traffic suggests that the agreed increases will begin to be fully reflected in global supply.
Market fears excess supply
This scenario has raised concern among investors and oil market operators. The International Energy Agency projects that global supply could exceed demand by about 3.8 million barrels per day this year, which increases the risk of oversupply and greater pressure on international crude oil prices.
Prices already show that trend. The barrel of Brent closed the week at US$72.12, well below the maximum of US$126 reached during the recent conflict in the Middle East. Likewise, OPEC’s benchmark crude oil fell from US$146.05 to US$69.33, according to the organization’s most recent data.
Yorak seeks to expand its production
The possibility of greater supply is also linked to the stance of Iraq, OPEC’s second-largest producer after Saudi Arabia. The Iraqi Oil Ministry formally requested to expand its production quota to increase its output, a request that, if accepted, would add more crude to the international market.
Added to this panorama is the decision of the United Arab Emirates to produce at maximum capacity after leaving OPEC, a measure that could also increase available supply and reinforce the downward pressure on oil prices.
Next review in August
The seven participating countries affirmed that they will continue to closely monitor oil market conditions and will meet again virtually on August 2 to evaluate the evolution of supply, demand and the effects of the production increases approved so far.