Will OPEC+ approve increase in oil output today?
What's the story
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are poised to approve a fourth consecutive increase in their oil output target. The decision is expected to be announced today. The move comes as part of efforts to tackle global supply challenges exacerbated by the ongoing US-Iran conflict.
Production hurdles
US-Iran conflict disrupts oil flows
The ongoing US-Iran conflict has disrupted oil flows through the crucial Strait of Hormuz, creating a major supply crisis. Major OPEC+ producers like Saudi Arabia have struggled to meet customer demands since late February. The situation worsened with the United Arab Emirates's exit from the organization after nearly six decades, further complicating production efforts for the group.
Production decline
OPEC+ output declines despite raising production quotas
Despite raising output quotas by nearly 600,000 barrels per day from April to June, OPEC+ has witnessed a sharp decline in production. The group's output averaged just 33.19 million barrels per day in April, a significant drop from February's average of 42.77 million barrels per day. This is largely due to export cuts by Gulf members amid the ongoing geopolitical tensions and supply constraints.
Approval pending
Seven key members likely to approve another output hike
Today, seven key OPEC+ members are likely to approve another increase in their oil output targets for July. The countries include Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia and Oman. The proposed increase is similar to June's adjustment of 188,000 barrels per day (bpd), which was revised down from earlier monthly hikes of 206,000 bpd in May and April due to the UAE's exit from the organization.