Key Takeaways
- OPEC+ approved an oil production increase of around 188,000 barrels per day from September.
- This completes the rollback of a 1.65 million bpd supply cut agreed in 2023.
- The group is now reviewing its members' oil production capacity for setting 2027 quotas.
OPEC+ has approved an increase in oil production by around 188,000 barrels per day from September, marking the completion of a phased rollback of voluntary output cuts. This decision comes after export disruptions caused by conflicts in the Gulf and Ukraine have limited the impact of previous monthly increases.
The move completes the unwinding of a supply cut that was originally agreed upon in 2023, when OPEC+ still included the United Arab Emirates (UAE), which left the group in May. Despite this approval, sources indicate that the group may pause further output increases for the fourth quarter of 2026.
Jorge Leon, an analyst at Rystad, commented on the next steps: 'OPEC+ has finished unwinding its voluntary cuts. The next challenge is managing the surplus that could emerge as export flows normalise.' He added, 'Having completed the restoration campaign, OPEC+ has little incentive to rush into further supply changes.'
The group still faces a layer of output cuts totaling roughly 2 million barrels per day, which are set to remain in place until the end of this year. These cuts date back to 2022 and were implemented as part of broader strategic decisions.
OPEC+ is currently conducting a review of its members' oil production capacity, with plans to use these assessments for setting 2027 output baselines from which quotas will be determined. This process could lead to potentially difficult negotiations, particularly among countries like Iraq that are pushing for higher individual quotas to reflect their increased capacity.
The approval of the September hike signifies a significant shift in OPEC+’s strategy, moving away from voluntary cuts towards managing surplus production as export disruptions normalize. However, the group remains cautious about further supply changes and is focused on preparing for future negotiations.
'OPEC+ has finished unwinding its voluntary cuts.'
Jorge Leon, Analyst at Rystad
'Having completed the restoration campaign, OPEC+ has little incentive to rush into further supply changes.'
Jorge Leon, Analyst at Rystad
