Representatives have indicated that major OPEC+ member countries intend to continue raising crude oil production quotas over the coming months, aiming to restore some of the idled production capacity by the end of September. However, this planned increase remains largely a policy on paper, with practical implementation facing significant obstacles.
OPEC+ has formally agreed to restore approximately two-thirds of the 1.65 million barrels per day (bpd) production cut target set for 2023. According to three representatives, the alliance plans to further raise production targets in three additional monthly phases to complete the restoration of the remaining capacity. In reality, however, major members lack the actual capability to fulfill these increased quotas, primarily due to the impact of tensions involving Iran on crude oil exports from the Persian Gulf.
Led by Saudi Arabia and Russia, OPEC+ has maintained only small, symbolic nominal production increases during the recent geopolitical conflict. Yet, the global market urgently requires more crude oil to fill the gap created by this conflict, which has resulted in a cumulative shortfall exceeding 1 billion barrels and has drawn down global inventories at a record pace. Consequently, oil prices have surged significantly, heightening the risk of a global economic recession.
Prior to the outbreak of the conflict involving the U.S., Israel, and Iran on February 28, the eight major OPEC+ members were already in the process of gradually restarting production capacity that had been shut down years earlier in response to an oil supply glut. As of this month, OPEC+ has lost a member: the United Arab Emirates (UAE) has formally exited the organization after decades of membership, citing disagreements with the group's leadership, particularly Saudi Arabia, over production quota restrictions.
Despite the UAE's departure, the remaining seven major members approved a plan during their May 3 monthly video meeting to increase production by 188,000 bpd in June, albeit this increase is largely nominal. The next meeting is scheduled for June 7, where production policies for July and beyond will be reviewed. With the UAE's exit, the original baseline for the 1.65 million bpd production cut is theoretically reduced by 144,000 bpd.
Geopolitical conflicts have severely impacted Middle Eastern crude oil production capacity, making the paper-based production increases difficult to implement. In practical terms, regional tensions and disruptions to shipping through the Strait of Hormuz have completely derailed the production increase targets agreed upon by OPEC+ in recent months, forcing several Middle Eastern oil-producing countries to significantly reduce their output.
OPEC's monthly report released on Wednesday showed that Saudi Arabia's crude oil production fell to 6.3 million bpd in April, the lowest level since 1990. Kuwait's oil production has dropped to a quarter of its pre-conflict level, while output from Iraq and the UAE has also declined substantially.
Despite facing the dual crises of geopolitical conflict and the unexpected exit of the UAE, OPEC+ is still formulating medium- to long-term production capacity policies. Three representatives stated that OPEC+ is conducting a review of each member country's maximum production capacity ceiling—a process initiated last year—aiming to establish more accurate baselines for production quotas by 2027. This assessment is being carried out by the Dallas-based consulting firm DeGolyer and MacNaughton Corp.
As of the latest update, the price for WTI crude oil futures for June delivery fell by 1.12% to $99.89 per barrel, while Brent crude oil futures for July delivery declined by 1.14% to $104.43 per barrel. Since the conflict erupted in late February, international oil prices have risen by approximately 50%.
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