The OPEC+ has agreed to increase oil production quotas again, signalling growing confidence that crude exports from the Gulf region are recovering following months of disruption caused by the Middle East conflict.
The decision was reached during a virtual meeting on Sunday involving key members of the alliance, including Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman.
In a statement issued after the meeting, the group said member countries would raise production by 188,000 barrels per day from August 2026 as part of efforts to gradually restore output following the conflict.
Oil production across several Gulf states had been significantly reduced after shipping through the Strait of Hormuz was severely disrupted during the regional war, limiting crude exports for months.
According to OPEC data, combined oil production by Saudi Arabia, Iraq and Kuwait declined by about six million barrels per day between the first quarter of 2026 and May.
The situation began to improve after Iran and the United States signed a memorandum of understanding on June 17 aimed at ensuring safe maritime navigation through the Strait of Hormuz while diplomatic talks continue.
Commodity analyst Giovanni Staunovo of UBS said production remains below OPEC+ targets despite the gradual recovery, indicating that member states still have room to increase output.
Shipping activity through the strategic waterway has steadily improved since the agreement, helping push global oil prices back to levels recorded before the conflict as markets anticipate a return to stable supply.
A US official, quoted by Bloomberg, said crude shipments through the Strait of Hormuz may already have exceeded 10 million barrels per day.
However, analysts cautioned that restoring production to pre-war levels will take time.
Ole Hansen of Saxo Bank said much of the oil now leaving the region had previously been stored in tankers or storage facilities, noting that restarting idle production is a gradual process.
He projected that exports would improve further in July, with a more significant recovery expected in August if shipping operations continue to normalise.
Despite the positive outlook, analysts warned that OPEC+ could face fresh challenges next year as global oil supply is expected to outpace demand.
Jorge Leon of Rystad Energy said the market is widely anticipating an oil surplus in 2027, although rebuilding depleted inventories could initially absorb part of the increased supply.
The alliance may also have to contend with internal disagreements over production targets after the departure of the United Arab Emirates from OPEC+ in May.
Iraq has already requested higher production quotas to offset losses suffered during the conflict, according to its Oil Ministry.
However, Hansen said such a request is unlikely to be considered immediately because the country's production has yet to recover fully.
He suggested Iraq's proposal could instead be addressed during OPEC+'s 2027 production capacity review, when members' output baselines are scheduled for reassessment.
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