OPEC+ to raise oil output by 188,000 bpd in September, extending gradual increase despite Strait of Hormuz blockade

Decision and quota increase

The OPEC+ alliance, led by Saudi Arabia and Russia, agreed on Sunday to add another 188,000 barrels per day (bpd) to its collective output target from September. The decision, taken during a virtual meeting of seven core members (Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman), marks the sixth consecutive month of gradual supply increases. Since the US-Israel war against Iran began on 28 February, the group has raised quotas by a cumulative 940,000 bpd, equivalent to nearly 1% of global demand. The April-May increase was 206,000 bpd, before the pace was trimmed to 188,000 bpd after the UAE left the organisation in May.

In their collective commitment to supporting oil market stability, the seven participating countries decided to implement a production adjustment of 188,000 barrels per day from the additional voluntary adjustments announced in April 2023.

The September increment completes, at least on paper, the reversal of two layers of production cuts totalling 1.65 million bpd agreed in 2023, when the United Arab Emirates was still a member. Excluding the UAE, total restrictions had reached around 3.5 million bpd, though actual reactivation has been far smaller because technical limitations prevent many countries from raising output as much as their quotas allow.

War and logistical bottlenecks

The practical impact of the quota increases has been severely limited by the war. The closure of the Strait of Hormuz, through which roughly 20% of global oil and gas transits, has blocked exports from Gulf members. The International Energy Agency (IEA) estimates that about 14 million bpd remain shut out of the market. Total OPEC+ production fell to 33.2 million bpd in April, almost 10 million less than before the conflict, keeping prices above $90 a barrel.

Russian output has also been hit by Ukrainian attacks on oil infrastructure aimed at curbing Moscow's ability to finance its aggression. The Joint Ministerial Monitoring Committee (JMMC) expressed concern over such attacks, warning that restoring damaged energy assets to full capacity is costly and time-consuming. It also stressed the critical importance of safeguarding international maritime routes to ensure the uninterrupted flow of energy.

Restoring damaged energy assets to their full capacity is a costly and time-consuming process, which affects overall supply availability.

Since the signing of a Memorandum of Understanding between Tehran and Washington, however, Saudi Arabia and its neighbours have begun to restore shipments, helping to generate a surplus in key Asian markets.

UAE exit and internal strains

The alliance's cohesion has been tested by the departure of the UAE, which left OPEC in May. Abu Dhabi, the only major producer able to raise output before its exit (adding 131,000 bpd), wants to sell more crude without quota constraints to finance its own war costs. The UAE can remain profitable with oil below $70 a barrel thanks to extraction costs of just $4–5, while Saudi Arabia requires a higher price to balance its budget, setting up a clash over market strategy.

What comes next

Delegates said last week that after the September increase, quotas are expected to remain stable until the end of the year, in line with plans to keep a third layer of idle supply frozen since 2022. One delegate cautioned that the plan could still change depending on circumstances. With the Strait of Hormuz still effectively blocked and infrastructure attacks continuing, the gap between OPEC+ targets and actual barrels reaching the market is likely to persist.