The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) has approved an increase in oil production quotas by 188,000 barrels per day (bpd) for July, marking the fourth consecutive monthly output increase as the alliance continues to unwind voluntary production cuts introduced in 2023.
The decision was reached during a virtual ministerial meeting of the group, led by seven key producers, Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman.
The latest adjustment forms part of OPEC+’s gradual rollback of the 1.65 million bpd voluntary production cuts implemented to support global oil prices. Following the July increase, the group is expected to have approximately 567,000 bpd of previously withheld production left to restore to the market. If the current pace is maintained, the remaining cuts could be fully reversed by September 2026.
Nigeria’s production quota remains unchanged at 1.5 million barrels per day throughout 2026.
Despite the decision to increase supply, oil prices weakened on the international market. Brent crude fell by $1.94, or 2.04 per cent, to $93.09 per barrel, while the U.S. benchmark West Texas Intermediate (WTI) declined by $2.54, or 2.69 per cent, to $90.54 per barrel.
The production increase comes against a backdrop of continued uncertainty in global energy markets, driven largely by disruptions to crude oil flows through the Strait of Hormuz, one of the world’s most strategic shipping routes for oil exports.
Industry reports indicate that supply constraints have persisted despite efforts to stabilise the market. Analysts warn that global oil inventories are falling steadily, raising concerns about potential price spikes if supply disruptions continue.
According to OPEC data, production among member countries and allied producers has declined significantly in recent months, with output averaging 33.19 million barrels per day in April compared to 42.77 million barrels per day in February.
Energy market observers have cautioned that shrinking inventories could create a supply crunch during the peak summer demand season.
Neil Chapman, Senior Vice President of Exxon Mobil, warned that global oil stocks are approaching critically low levels, adding that Brent crude could surge to between $150 and $160 per barrel if inventories continue to decline.
“We’re approaching unprecedented inventory levels. Once stocks fall much further, prices could rise sharply,” Chapman said during an industry conference in New York.
The International Energy Agency (IEA) has also expressed concerns that if current stock drawdowns persist, oil markets could face severe supply tightness in the coming weeks.
Analysts at JPMorgan similarly warned that crude prices could climb rapidly in the second half of June unless shipping activity through the Strait of Hormuz returns to normal levels.
While OPEC+ continues to increase production in an effort to stabilise markets, traders remain focused on geopolitical developments and global inventory levels, both of which are expected to play a crucial role in determining the direction of oil prices in the months ahead.
