OPEC+ Set for Final Quota Hike Amid Ongoing Middle East War Disruptions

OPEC+, consisting of major oil producers Saudi Arabia, Russia, and five other members, is expected to raise their oil production quotas for September after meeting online on Sunday. Analyst Jorge Leon from Rystad Energy predicts an increase of 188,000 barrels per day, following several months of similar hikes.

The move aims to offset the disruptions in global energy supplies caused by the ongoing Middle East war. However, this may have limited impact as many OPEC+ members struggle to produce oil at their official targets due to declining production capacity.

Gulf countries face challenges in increasing exports due to Iran's near-paralysis of the Strait of Hormuz, despite a brief upswing after a U.S.-Iran memorandum of understanding was signed in June. Russia's oil infrastructure has also been targeted by Ukrainian drone attacks, limiting its production to around 9 million barrels per day, compared to a target of 9.8 million.

OPEC+ is currently undergoing a process to set maximum sustainable capacity levels for all member states. Analysts at DNB Carnegie warn that the group may face difficult quota talks starting next year after the September increase.