OPEC+ expected to increase oil production target in July despite war

The OPEC+ oil-producing countries are likely to agree to a further increase in their July production target when they meet on Sunday, three sources said, although the war with Iran has so far prevented several of them from making earlier increases.

Another quota increase would show that the group is approaching normality, despite the disruptions caused by the closure of the Strait of Hormuz and the departure of the United Arab Emirates, a member of the Organization of Petroleum Exporting Countries for almost 60 years.

Seven main members of OPEC+, which groups OPEC and allied producers including Russia, increased their production quotas from April to June by almost 600,000 barrels per day.

In reality, the group's production collapsed due to export cuts by Persian Gulf members, averaging 33.19 million bpd in April versus 42.77 million in February, according to OPEC data.

The monthly target set by the seven is expected to increase by about 188,000 bpd in July, the sources said. This is the same as the increase agreed for June, which was adjusted down from 206,000 bpd to take into account the UAE's exit.

All sources spoke on condition of anonymity and said a final decision had not yet been made.

Officials from OPEC, Saudi Arabia and Russia did not immediately respond to Reuters' requests for comment.

The seven OPEC+ countries are increasing production as part of the gradual reduction of a 1.65 million bpd production cut that the then eight members agreed to in 2023.

From July onwards, the seven will have around 567,000 bpd of the original cut to return to the market, taking into account the exit of the United Arab Emirates from May 1, according to Reuters calculations.

This would mean the remainder of the cut will be reversed by the end of September if OPEC+ maintains monthly increases of around 188,000 bpd for August and September.

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OPEC delegates are in Vienna on Monday and Tuesday this week for technical meetings and presentations. Sunday's ministerial meetings are expected to be online.

The seven of the 21 OPEC+ members who will meet on Sunday are Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia and Oman.

Two other OPEC+ ministerial meetings, also scheduled for June 7, are unlikely to make any policy changes, the sources said.

Source: CNN