OPEC+ Output Hike Falls Flat Amid Ongoing Middle East Tensions

The OPEC+ group's decision to increase crude oil production quotas for next month is seen as irrelevant in the current market due to ongoing disruptions caused by the Iran conflict.

The Strait of Hormuz remains largely closed, and the threat to the nearby Bab el-Mandeb waterway remains unresolved, making it unlikely that OPEC+ will be able to ship its agreed-upon production levels.

A Reuters survey shows that the eight members of OPEC with quotas pumped 20.276 million barrels per day (bpd) in June, which was 6.246 million bpd below their target.

Russia, a key non-OPEC member, had production of 8.928 million bpd in June, almost one million bpd below its agreed quota.

The market is currently priced for a peaceful resolution to the conflict, with benchmark Brent contracts dropping 6.8% to $83.98 per barrel on Monday, 34% below the highest price hit on April 30.