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Saudi Arabia, Russia and five other members of OPEC+ are expected to raise their oil production quotas for September when they meet online Sunday, as the Middle East war continues to disrupt global energy supplies.
The enlarged Organization of the Petroleum Exporting Countries (OPEC+) is likely to increase production by 188,000 barrels per day, following several months of similar hikes, said Jorge Leon, an analyst at Rystad Energy.
However, the September increase is likely to be the last in the current series of production adjustments, he said.
Between late 2022 and 2023, OPEC+ became concerned that oil prices were falling and agreed to cut production in three separate rounds, reducing total output by nearly 6 million barrels per day.
Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, Oman and the UAE, before its exit from the group on May 1, later changed strategy by gradually raising production from 2025.
A September increase would complete the unwinding of the second of the three production-cut packages introduced by OPEC+.
In practice, many OPEC+ members cannot produce as much oil as their official targets allow because of a "decline in production capacity," making higher targets less meaningful, said Giovanni Staunovo, an analyst at UBS.
Gulf countries have struggled to increase exports because of the near-paralysis of the Strait of Hormuz orchestrated by Iran during the war in the Middle East, despite a brief upswing in shipping traffic after a U.S.-Iran memorandum of understanding was signed in June.
In Russia, whose oil infrastructure has been repeatedly targeted by Ukrainian drone attacks, production is hovering at around 9 million barrels per day, compared with a target of 9.8 million barrels per day.
It remains unclear when the group will actually be able to increase oil volumes, though some member countries, including Iraq, have expressed a desire to significantly boost production.
The group is currently undergoing a process to set maximum sustainable capacity levels for all member states, Staunovo said.
OPEC+ "faces potentially difficult talks over new production quotas" starting next year after the September increase, analysts at DNB Carnegie said.
"I don't think cohesion is at risk at this very moment," Leon said, while warning that the UAE's withdrawal from the group in May had highlighted a weakness in that area.
Explaining the move, Abu Dhabi said it "serves our national interests and long-term strategic objectives."
The UAE had announced several projects and investments in recent years aimed at expanding its ability to pump oil, making it increasingly difficult to justify remaining under strict OPEC+ production limits.
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