Key Takeaways
- OPEC+ plans to increase oil production by 188,000 barrels per day in September.
- The group will then pause further output increases for the rest of the year.
- This decision follows a phased rollback of a 1.65 million bpd supply cut.
OPEC+ has approved an increase in oil production by approximately 188,000 barrels per day starting from September, according to sources. This move is part of the group's strategy to gradually unwind a significant supply reduction that was agreed upon in 2023.
The seven core members of OPEC+ — Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan, and Oman — have been steadily increasing their monthly production quotas throughout this year. However, these increases have largely remained on paper due to disruptions caused by the Iran and Ukraine conflicts, which affected exports from the Gulf, Russia, and Kazakhstan.
Following September's increase, OPEC+ is likely to pause further output hikes for the remainder of 2023. This decision comes as the group faces potential challenges in agreeing on new production quotas. The pause will leave approximately 2 million barrels per day of cuts from 2022 still in place until members decide how to distribute additional supply.
The increase in September is expected to complete a phased rollback of the initial 1.65 million barrels per day (bpd) supply cut that was agreed upon in 2023, when the United Arab Emirates was still part of OPEC before leaving in May. The group is currently conducting a review of members' oil production capacity for setting output baselines for 2027.
Some OPEC+ members, such as Iraq, are advocating for higher individual quotas to reflect their increased production capabilities. This push suggests that the group may face internal disagreements over how to distribute the additional supply among its members.
