OPEC+ Pauses Output Hikes Amid Ongoing US-Iran Conflict

OPEC+ is set to pause its output hikes after a final increase in September, citing uncertainty over global oil supply due to the US-Iran conflict. The Organization of the Petroleum Exporting Countries and its allies will hold an online meeting on August 2 to confirm the agreement for a daily production increase of 188,000 barrels in September, but this will be the last hike for the year.

The decision comes as oil prices have plunged following a sharp correction, with Brent crude futures briefly breaching $100 per barrel and then retreating below $90. The market is still volatile due to ongoing tensions between the US and Iran, which have caused disruptions to Strait of Hormuz transit and made it difficult for OPEC+ to gauge supply needs.

Market analysis suggests that the correction was driven by a rapid unwinding of risk premiums previously priced into crude, rather than a deterioration in demand. Wall Street energy analysts believe that the market still needs to retain some level of risk premium due to ongoing geopolitical tensions and potential future escalation.