OPEC+ Unwinds Output Cuts, Eyes Pause on Further Hikes

OPEC+ has approved an increase in oil production quotas for September, marking the final step in unwinding a layer of voluntary output cuts. The group agreed to add around 188,000 barrels per day to its production quota from September, effectively ending a supply cut that was originally implemented in 2023.

The increase is largely symbolic, as previous OPEC+ hikes this year have had little impact on the market due to export disruptions caused by the Iran and Ukraine wars. Core OPEC+ members, including Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan, and Oman, agreed to the quota increase.

OPEC+ sources indicate that the group is likely to pause output increases for the fourth quarter of this year, but its statement made no mention of future plans. Analyst Jorge Leon suggests that OPEC+ has 'little incentive to rush into further supply changes,' and a base case scenario is a pause while the group prepares for 2027 quota negotiations.

OPEC+ is currently reviewing oil production capacity among its members, which will be used as the basis for setting quotas in 2027. This review may lead to potentially difficult talks over new production quotas, with some members pushing for higher individual quotas to reflect their increased capacity.