OPEC+ 7 Decide to Boost Production in July

Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman decided to boost output next month at a virtual meeting held on June 7, a statement posted on OPEC’s website on the same day outlined.

“The seven OPEC+ countries, which previously announced additional voluntary adjustments in April and November 2023 … met virtually on 7 June 2026, to review global market conditions and outlook,” the statement said.

“In their collective commitment to support oil market stability, the seven participating countries decided to implement a production adjustment of 188,000 barrels per day from the additional voluntary adjustments announced in April 2023,” it added, noting that this adjustment will be implemented in July.

According to a table accompanying the statement, Saudi Arabia and Russia will each be contributing 62,000 barrels per day to the 188,000 barrel per day increase. Iraq will be contributing 26,000 barrels per day, Kuwait will be contributing 16,000 barrels per day, Kazakhstan will be contributing 10,000 barrels per day, Algeria will be contributing 6,000 barrels per day, and Oman will be contributing 5,000 barrels per day, the table showed.

The table also outlined that, “required production” in July is 10.353 million barrels per day for Saudi Arabia, 9.824 million barrels per day for Russia, 4.378 million barrels per day for Iraq, 2.644 million barrels per day for Kuwait, 1.608 million barrels per day for Kazakhstan, 995,000 barrels per day for Algeria, and 831,000 barrels per day for Oman.

“The additional voluntary adjustments announced in April 2023 may be returned in part or in full subject to evolving market conditions and in a gradual manner,” the OPEC statement noted.

This statement outlined that the seven OPEC+ countries “will continue to closely monitor and assess market conditions”, and revealed that “in their continuous efforts to support market stability”, these countries “reaffirmed the importance of adopting a cautious approach and retaining full flexibility to increase, pause or reverse the phase out of the voluntary production adjustments, including reversing the previously implemented voluntary adjustments announced in November 2023”.

“The seven OPEC+ countries also noted that this measure will provide an opportunity for the participating countries to accelerate their compensation,” the statement said.

“The seven countries reiterated their collective commitment to achieve full conformity with the Declaration of Cooperation, including the additional voluntary production adjustments that will be monitored by the Joint Ministerial Monitoring Committee (JMMC),” it added. “They also confirmed their intention to fully compensate for any overproduced volume since January 2024. The compensation period will be extended until the end of December 2026,” it continued.

According to the statement, the seven OPEC+ countries will hold monthly meetings “to review market conditions, conformity, and compensation”. The seven countries are next scheduled to meet on July 5, the statement revealed.

In a market update sent to Rigzone on Sunday, Rystad said the production increases announced by OPEC+ that day “will have little to no real impact on the oil markets”.

Jorge Leon, Rystad Energy Head of Geopolitical Analysis, highlighted in the update that, “with the Strait of Hormuz closed, the issue is not whether OPEC+ raises paper quotas, but whether additional barrels can actually reach the market”.

“OPEC+’s decision to continue increasing production by 188,000 barrels per day for June confirms that the group remains on track to unwind the first tranche of voluntary cuts by September, if not earlier. But in the current market, the physical impact of such a decision would be close to zero,” he added.

“This is not only a Gulf export problem. Russia is also under growing pressure. Its new quota would rise to around 9.82 million barrels per day, but the country is only producing around 9.2 million barrels per day in May, partly as a result of intensifying drone attacks on oil infrastructure,” Leon continued.

“This output gap of around 600,000 barrels per day below its new quote reflects both the toll of infrastructure attacks and a structural erosion of production capacity that predates the current conflict,” he warned.

Leon went on to state in the update that the latest increase will likely expose a widening gap between OPEC+ targets and Russia’s actual production capacity.

“The more important question is what happens after the first tranche of voluntary cuts has been fully unwound,” Leon pointed out.

“The capacity assessment currently undergoing should serve as the basis for 2027 quotas, but with the Strait of Hormuz closed and several producers operating far below normal levels, it will be very difficult to accurately assess each country’s sustainable production capacity,” he said.

“That makes the next quota reset much more politically sensitive,” he warned.

Looking at 2027, Leon projected in the update that OPEC+ “could, in theory, move from unwinding voluntary cuts to unwinding the official cuts agreed in October 2022, which account for around two million barrels per day”.

He warned, however, that market dynamics may work against that.

“Once the Strait of Hormuz reopens and flows gradually recover, the market could face a very large surplus - potentially around five million barrels per day in the months following a Hormuz reopening - driven by returning OPEC+ supply, stronger U.S. shale output, and weaker demand after a period of very high oil prices,” he said.

Leon also highlighted that a quota-less United Arab Emirates would also likely ramp up production.

“That surplus may not fully materialize at first, because countries will rush to refill strategic petroleum reserves (SPR) and rebuild commercial inventories,” Leon said.

“The SPR refill cycle alone could absorb significant volumes in the near term, but that demand is temporary - once that demand clears, the structural surplus will return,” he added.

“But once that restocking wave fades, OPEC+ may be forced back into cutting mode.
That is when cohesion will become the central issue,” he noted.

“OPEC+ cohesion is easy to maintain when the market does the discipline for you. The real test is whether that holds when the barrels come back, stocks rebuild, and members have to decide who cuts,” he warned.

Rigzone has contacted OPEC, the Department of Information and Press of the Russian Ministry of Foreign Affairs, and the UAE Ministry of Foreign Affairs for comment on Rystad’s market update. At the time of writing, none of the above have responded to Rigzone.

To contact the author, email andreas.exarheas@rigzone.com