OPEC+ Prepares to Stop Raising Oil Output Targets

OPEC+ is preparing to approve one more production increase for September and then put the monthly quota parade on hold through the end of the year.Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan, and Oman are expected to raise their combined September target by about 188,000 barrels per day when they meet on August 2, sources told Reuters.That would match the increases announced for June, July, and August and complete the return of a 1.65-million-bpd voluntary cut agreed in 2023, adjusted for the UAE’s departure from OPEC in May. Then OPEC+ appears ready to stop.One source said current production targets would remain in place from October until new quotas take effect in January 2027. No final decision has been made.The pause would leave another 2 million bpd of group-wide cuts in place through the end of 2026. Deciding what happens to those barrels will require OPEC+ to settle a much less pleasant matter: how much each member should be allowed to produce.The group is reviewing the maximum sustainable production capacity of its members, which will be used to set 2027 baselines. Iraq and other producers want higher quotas to reflect investments that have expanded their capacity.Everyone wants credit for barrels they say they can pump. Recent events have made the counting considerably messier.The Iran war has reduced exports from several Middle Eastern members and cut deeply into the group’s effective spare capacity. Iraq remains constrained by export bottlenecks. Kazakhstan has reduced production after attacks disrupted Black Sea loadings. Russia is dealing with refinery and terminal outages.OPEC+ has spent months raising targets while actual group output fell. The increases still gave members permission to restore supply whenever wells, pipelines, ports, and shipping lanes allowed it. Permission was the easy part.The group now has to decide how much capacity really exists, who gets to claim it, and whether the market will need it in 2027. The IEA expects a substantial surplus if oil flows through the Strait of Hormuz recover.By Julianne Geiger for Oilprice.comMore Top Reads From Oilprice.comSaudi Crude Tanker Goes Dark to Slip Through Bab el-MandebHormuz Tanker Crossings Sink to Lowest Level Since May as War Risk SpikesADNOC Issues Seventh Crude Tender Since June Despite Hormuz, Red Sea Risks