Opec+ Adds 188,000 bpd as Hormuz Reopens

Opec+ has agreed to raise oil output targets by 188,000 barrels per day (bpd) from August, the group announced after an online meeting on Sunday. The move adds more supply to a market already under pressure from falling prices, a gradual reopening of the Strait of Hormuz, and weaker Chinese demand.

The August increase follows similar hikes for June and July. Since April, the seven core members of the group, namely Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan, and Oman, have collectively raised output quotas by almost 800,000 bpd. Most of that increase has existed only on paper, however, because the US-Israeli war on Iran closed the Strait of Hormuz to tanker traffic, cutting off export routes for several key members including Saudi Arabia, Kuwait, and Iraq.

From paper cuts to real barrels

The gap between Opec+ quota increases and actual production has been striking. Opec data show the group's output fell sharply to 33.13 million bpd in May, down from 42.77 million bpd in February before the conflict disrupted shipping lanes. Output began recovering in June, partly because the United States helped the UAE and other members find alternative export routes, but production remains well below pre-war levels.

The Strait of Hormuz sits at the mouth of the Persian Gulf and is one of the world's most critical oil chokepoints. When it closed to tanker traffic, it effectively blocked a large share of global crude exports overnight. The gradual reopening is now letting those barrels flow again, which adds real supply pressure on top of Opec+'s quota increases.

Despite the supply disruption, Brent crude prices have already retreated sharply. Prices traded near $72 per barrel on Friday, down from peaks above $120 per barrel reached during the conflict, and roughly back to where they were just before the United States and Israel struck Iran on February 28. Three forces pushed prices down even while physical supply was disrupted: lower Chinese crude imports, higher exports from producers outside the Middle East, and a record coordinated release of strategic reserves by member nations of the International Energy Agency.

What comes next for Opec+

The group still has roughly 379,000 bpd of its original 2023 supply cut left to return to the market, after accounting for the UAE's departure from the alliance in late April. The UAE left because it wanted to produce closer to its full capacity without the output restraints the group imposed. If Opec+'s seven core members agree one more increase of a similar size at their next meeting on August 2, they will have fully unwound the 1.65 million bpd cut agreed back in 2023.

Iraq is adding another layer of tension. Baghdad has signalled it wants higher production quotas, a demand that could complicate negotiations at the August 2 meeting. Opec+ now has 21 members including Iran, but only the seven core producers have actively managed monthly output targets in recent years.

UBS analyst Giovanni Staunovo said the core seven "kept unwinding their production cuts as widely expected," and pointed to two near-term variables: how many tankers can cross the Strait of Hormuz and how quickly Chinese crude imports recover. A memorandum of understanding between Washington and Tehran aimed at ending the war has also softened trader concern about a prolonged supply shock, reducing the risk premium that briefly pushed prices above $120.

For oil markets, the August increase matters less as a volume shock and more as a signal. Opec+ is clearly prioritizing the pace of its supply rollback over price defense. With Brent already back near pre-war levels despite production still running below February peaks, further quota additions combined with improving Hormuz flows could keep downward pressure on prices through the third quarter of 2026. Traders and refiners will watch the August 2 meeting closely to gauge whether the group stays on its current path or pulls back if prices slip further.