OPEC+ Output Hike Falls Flat Amid Strait of Hormuz Disruptions

The recent decision by OPEC+ to increase crude oil production quotas for September has been met with skepticism, given the ongoing disruptions in the Strait of Hormuz and Bab el-Mandeb waterway.

Certainly, as long as these critical shipping lanes remain closed or threatened, it's unlikely that OPEC+ will be able to meet their increased output targets. The seven core members of OPEC+, including Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan, and Oman, agreed to boost production by 188,000 barrels per day (bpd) for September.

This decision effectively completes the rollback of a 1.65 million bpd supply cut originally implemented in 2023, when the United Arab Emirates was still part of OPEC+

The current market data suggests that the eight members of OPEC with quotas have only managed to pump 20.276 million bpd in June, which is 6.246 million bpd below their agreed target.

Russia, a key non-OPEC member, produced 8.928 million bpd in June, nearly one million bpd below its quota.