OPEC+ Agrees to Boost Oil Production Amid Ongoing Disruptions

Saudi Arabia, Russia and five other key members of OPEC+ agreed to boost oil production by 188,000 barrels a day from September, against a backdrop of disruption caused by West Asia conflict. "The seven participating countries decided to implement a production adjustment of 188 thousand barrels per day," they said in a joint statement. The increase, decided by the key countries in the enlarged Organisation of the Petroleum Exporting Countries, was widely expected by analysts. "OPEC+ has finished unwinding its voluntary cuts. The next challenge is managing the surplus that could emerge as export flows normalise," said Jorge Leon, analyst at Rystad Energy. He warned, however, that "today's decision changes little in the near term because (the Strait of) Hormuz remains constrained. The real market impact will come when normal export flows resume." The Gulf countries have struggled to increase exports due to the near-paralysis of the Strait of Hormuz during the war in West Asia, despite a brief upswing in shipping traffic after a US-Iran memorandum of understanding was signed in June. Many OPEC+ members cannot produce as much oil as their official targets allow due to a "decline in production capacity", so increasing targets has become less meaningful, said Giovanni Staunovo, an analyst at UBS.