OPEC+ Presses On with Fourth Consecutive Output Hike Despite Hormuz Paralysis

The OPEC+ alliance of oil producers agreed on Sunday to raise its collective output target by 188,000 barrels per day for July, the fourth consecutive monthly increase, even as the closure of the Strait of Hormuz throttles actual supply. In a video conference, ministers from the seven core countries — Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman — endorsed the hike, which matches the June increment and is slightly smaller than the 206,000 b/d rises in April and May after the departure of the United Arab Emirates from the group.

Under the new quotas, Saudi Arabia and Russia will each be allowed to pump an additional 62,000 b/d, reaching 10.353m and 9.824m b/d respectively, while Iraq, Kuwait and others receive smaller increments. The UAE’s exit in early May, after nearly six decades in the Organisation of the Petroleum Exporting Countries, has recast alliance dynamics and removed a major voice from quota negotiations, with its previous allocation now redistributed among the remaining seven.

Yet the quota increase is almost entirely detached from barrels that can physically reach the market. The US-led military campaign against Iran has all but halted tanker traffic through the Strait of Hormuz, the conduit for roughly a fifth of global oil trade, since late February. Jorge Leon, an analyst at Rystad Energy, remarked that “the market is not short of quota announcements; it is short of physical barrels that can actually move,” describing the latest increase as “more of a policy signal than a real supply boost.” Actual production data from OPEC shows the group’s output averaged just 33.19m b/d in April, having plummeted from 42.77m in February, as Gulf members are forced to cut exports.

Viewed from Moscow, the decision is framed as a calibrated tool to maintain market stability while preserving flexibility: the coalition statement emphasised that the increases could be “paused or reversed” if conditions shift. Moroccan energy academics, writing in the Arabic press, interpret the successive hikes as a “strategic attempt to strike a delicate balance between curbing inflationary pressures and maintaining market calm” amid what they call the worst supply crisis in history. Gulf-focused outlets note that the gradual unwinding of voluntary cuts first introduced in April 2023 is proceeding cautiously, with next month’s meeting on 5 July expected to reassess the trajectory.

The yawning gap between headline quotas and real-world supply underscores a deeper malaise for the producer group. With Hormuz likely to remain impassable for the foreseeable future, additional quota announcements risk becoming routine exercises in signalling rather than substantive market interventions. As one OPEC+ source told international agencies, the alliance is trapped: unable to loosen the supply tap while demand in Asia shows signs of recovery, yet under pressure from consuming nations to act against elevated crude prices. The upcoming full ministerial meeting in November will have to confront the widening credibility gap between stated targets and operational reality.