A few countries within the OPEC+ alliance plan to raise their oil production levels next month. This move comes after a period of declining fuel prices, which have reached lows not seen since prior to the conflict involving the U.S., Israel, and Iran.
OPEC+, which includes the Organization of the Petroleum Exporting Countries and its allies, announced on Sunday that seven member countries will increase oil production by a total of 188,000 barrels per day in August. This marks the fifth consecutive month of production increases agreed upon by OPEC+. The countries involved in this decision are Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman.
“The countries will continue to monitor and assess market conditions. In their ongoing efforts to support market stability, they reaffirmed the importance of taking a cautious approach,” stated the group of oil producers.
Recently, optimism in the market led to a drop in crude oil prices following an interim deal between the U.S. and Iran to pause their hostilities. Under a broader agreement, Iran consented to allow ships to pass unimpeded through the Strait of Hormuz, while the U.S. agreed to lift its blockade of Iranian ports.
Since then, more commercial vessels have navigated the strait, a major route for roughly a fifth of the world’s oil before the conflict. However, shipping traffic is still below pre-war levels, and tensions remain high. Iran’s military command recently warned that all oil tankers passing through the strait must adhere to approved routes or face a “forceful response.”
Oil prices have continued to fall as negotiators from Iran and the U.S. work towards a lasting peace agreement. Brent crude, serving as the international benchmark, recently closed at under $72 a barrel. This price approaches the level seen before the U.S. and Israel’s strikes on Iran in late February and is considerably lower than the nearly $120 per barrel recorded in March.
The conflict had spurred an energy crisis worldwide. With shipping largely blocked in the Strait of Hormuz, previous small production increases by OPEC+ were insufficient to offset the impact on global oil supplies.
According to a recent estimate by S&P Global Energy, Gulf oil production is unlikely to fully recover until the first quarter of 2027. Energy experts caution that fuel prices and consumer costs are expected to remain high even after the conflict’s resolution.