Key facts
- OPEC+ agreed to boost output targets by 188,000 barrels per day starting in August.
- Exports from key producers via the Strait of Hormuz are recovering.
- Brent crude futures fell 0.33% to $71.88 a barrel.
- US West Texas Intermediate crude decreased by 0.16% to $68.58 a barrel.
- The United Arab Emirates left OPEC as of May 1.
Oil prices experienced a slight decline as OPEC+ reached an agreement to increase its output targets starting in August. This decision, coupled with a recovery in exports from key producers through the Strait of Hormuz, is expected to contribute to a potential rise in global oil supplies.
Brent crude futures saw a decrease of 0.33%, settling at $71.88 a barrel, while US West Texas Intermediate crude was down 0.16% at $68.58 a barrel. Both contracts showed minimal change over the past week, following a period of declines, as traders closely monitored discussions between the United States and Iran concerning shipping through the Strait of Hormuz and the resurgence of Gulf oil exports.
The Organization of the Petroleum Exporting Countries and its allies, including Russia, agreed to raise output targets by an additional 188,000 barrels per day from August. This follows similar increases implemented in June and July. However, the actual impact of these increases has been limited, partly due to the ongoing conflict involving Iran, which had previously disrupted tanker traffic through the Strait of Hormuz for major OPEC producers such as Saudi Arabia, Kuwait, and Iraq, thereby capping their production.
Analysts noted that the agreed-upon output increase was largely in line with expectations. The departure of the United Arab Emirates from OPEC in May and the ongoing ramp-up of production following the conflict suggest that current quotas may not be fully met. Gulf members have been actively reviving supplies that were halted during the conflict and are consequently increasing their exports. OPEC's oil output in June reportedly rose by 3.3 million barrels per day month-on-month to 19.43 million bpd, recovering from a more than two-decade low. Gulf oil exports in June also saw a significant jump, exceeding 10 million barrels per day, though volumes remain approximately 40% below pre-conflict levels.
Additionally, oil shipments from Russia's western ports reached a record high in June and are anticipated to maintain this level in July. This surge is attributed to Ukraine's drone attacks on Russian refineries, which have compelled Moscow to increase its crude exports.