OPEC+ Raises Output As Hormuz Traffic Recovers

OPEC+ raised output after a virtual meeting on July 5, 2026, approving fresh August quotas as the group continued its monthly unwind of 2023 voluntary cuts. The move, combined with resuming shipments through the Strait of Hormuz, eased pressure on oil prices.

OPEC+ Decision and Unwinding Production Cuts

At the July 5 meeting, ministers from seven core producers—Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan, and Oman—agreed to raise collective production quotas by 188,000 barrels a day effective August. This increase is part of a series of monthly hikes reversing a 1.65 million barrel a day voluntary cut imposed in 2023.

From April through July, the group restored nearly 800,000 barrels a day to quota levels. After the August increase, about 379,000 barrels a day of the original cut remain to be returned. If OPEC+ maintains the current monthly pace, it would fully unwind the remaining cuts by the end of September 2026.

The United Arab Emirates exited the group in late April, reshaping quota shares among the remaining members. Since then, Iraq has pressed for higher allocations.

The quota adjustments are implemented through member production targets rather than formal treaty changes, with no indication that external regulatory approvals are required.

Market Balance and Recovery of Hormuz Traffic

Brent crude has softened toward pre-conflict levels, trading near $72 a barrel, down from peaks above $120 during the conflict. Softer Chinese imports, stronger output from non-Middle East producers, and a record strategic stock release led by the International Energy Agency have contributed to a more balanced, potentially oversupplied market. Traders have reduced the war-risk premium as pledged barrels and strategic reserves add to available supply.

Shipping through the Strait of Hormuz, a key chokepoint for global oil flows, has gradually resumed after closures tied to the conflict. Throughput may have already exceeded 10 million barrels a day, though this remains below historical flows near 20 million. Gulf exports are rising but still below pre-war levels. The return of physical flows alongside higher quotas has reinforced downward pressure on prices.

OPEC+ output fell to 33.13 million barrels a day in May from 42.77 million in February amid war-related disruptions, then began recovering in June. Analysts note that actual production remains below official quota targets, suggesting physical supply may lag formal increases.

Gabriel Makhlouf, a member of the European Central Bank’s Governing Council, said the recent fall in oil prices “will not be felt” as immediate relief in inflation, indicating limited near-term pass-through to consumer prices.