OPEC+ Expected to Raise Oil Production Quotas: Key Implications for Middle East Investors and Businesses
Seven OPEC+ members are expected to increase their oil production quotas on Sunday, as Gulf countries continue to cope with the impacts of the ongoing Middle East conflict, analysts told AFP.
Saudi Arabia, Russia, and five other members of the expanded Organisation of the Petroleum Exporting Countries (OPEC+) are set to hold an online meeting on Sunday to discuss production quotas for August.
Giovanni Staunovo, a commodity analyst at Swiss bank UBS, indicated that OPEC+ will likely maintain its gradual reduction of production cuts, projecting an increase of approximately 188,000 barrels per day. However, he noted that current production levels remain below the group’s targets.
Gulf nations were forced to reduce output following disruptions in the Strait of Hormuz, which were caused by Iran amid the regional conflict, effectively blocking their oil exports for several months.
According to OPEC data, from the first quarter of 2026 through May, combined oil production by Saudi Arabia, Iraq, and Kuwait—three of the seven countries expected to raise quotas—declined by about six million barrels per day.
On June 17, Tehran and Washington signed a memorandum of understanding to remove obstacles to maritime traffic in the Strait of Hormuz throughout the duration of their ongoing talks. Since then, shipping in the area has shown signs of recovery, and oil prices have fallen sharply to levels seen before the conflict, reflecting expectations of a gradual normalization.
A U.S. official cited by Bloomberg suggested that oil supplies passing through the strait may already exceed ten million barrels per day. However, Ole Hansen, an analyst at Saxo Bank, pointed out that much of this oil has been stored on tankers or in storage facilities, emphasizing that restarting shut-in production takes time.
Hansen anticipated that July will show some improvement in production, with more significant recovery likely to accelerate by August, assuming continued normalization of shipping operations.
Looking ahead to next year, Jorge Leon, an analyst at Rystad Energy, forecast a possible surplus in oil supply. While rebuilding inventories depleted during the conflict may initially absorb increased flows, producers could face significant downward pressure on prices later.
OPEC+, which has faced challenges following the departure of the United Arab Emirates from the group in May, will need to balance falling prices against member countries’ calls for higher production.
Iraq, in particular, has requested increased production quotas to compensate for output lost during the conflict, the Iraqi Oil Ministry confirmed in late June. Nevertheless, Hansen argued that an immediate increase in quotas is unnecessary, as production has yet to return to pre-conflict levels. He suggested that Iraq’s request might be considered during the 2027 capacity review, when members’ production baselines will be reassessed.
At the end of 2026, OPEC+ is scheduled to reevaluate members’ quotas based on their production capacities—a process that could prove contentious.
Special Analysis by Omanet | Navigate Oman’s Market
The anticipated gradual increase in OPEC+ oil production quotas signals a cautious recovery in Gulf oil supplies, yet persistent below-target output highlights ongoing disruptions. For Omani businesses and investors, this scenario presents both opportunities to capitalize on rising production-linked economic activities and risks from potential price volatility as surplus pressures may drive prices down later. Smart stakeholders should monitor OPEC+ quota adjustments closely and consider diversification strategies to mitigate dependency on fluctuating oil revenues.
