Seven core Opec+ members have decided to raise their crude production targets further in August as they prepare the ground to significantly boost output following the interim deal to end the US-Iran war.
Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman agreed on Sunday to implement another 188,000 b/d increase to their collective crude production ceiling in August. This leaves just 188,000 b/d of voluntary cuts in place, which could be fully unwound in September.
The decision marks the fifth increase since the start of the US-Iran war on 28 February, which prompted Tehran to severely disrupt shipping through the strait of Hormuz and forced Mideast Gulf producers, including Saudi Arabia, Iraq and Kuwait, to implement unprecedented output reductions.
Argus estimates that crude production from these three countries in May was close to 8.5mn b/d below their cumulative target at roughly 8.7mn b/d. Overall Opec+ output in May was down 9.6mn b/d from the level before the war began.
But the relaxation of targets over the past few months could see the group exceed their pre-war output once flows through the strait of Hormuz normalise.
The US-Iran interim deal on 17 June has already led to a pick-up in transits through the strait and allowed Saudi Arabia, Iraq and Kuwait to restore some of their output. Further gains will depend on whether shipping through the waterway continues to recover and how the US-Iran peace talks evolve over the next few weeks.
The seven Opec+ members are next scheduled to meet next on 2 August.
