Oil Slips As OPEC+ Raises August Output Targets While Gulf Exports Recover

Oil prices edged lower on Monday as OPEC+ agreed to another round of production target increases from August and Gulf exports continued their gradual recovery, adding to expectations of growing global supply.

As of 9:30 am IST, Brent crude fell 0.35% to $71.70 a barrel, while West Texas Intermediate (WTI) slipped 0.10% to $68.62 a barrel. Both benchmarks had remained largely unchanged last week after declining for several weeks before that.

The OPEC+ Decision

Sunday's OPEC+ meeting produced a familiar outcome — another 188,000 barrels per day increase in output targets from August, the fifth consecutive monthly hike. The participating countries are Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman.

The group said it would continue monitoring market conditions and reaffirmed a cautious approach to market stability. But the targets have limited real-world impact for now:

• The US-Israeli war with Iran closed the Strait of Hormuz to tanker traffic, preventing key producers including Saudi Arabia, Kuwait and Iraq from lifting output during the conflict

• The United Arab Emirates exited OPEC on 01 May, further complicating quota calculations

• Production is still ramping up as Gulf producers rebuild supply chains disrupted by the conflict

Experts said the number was in line with expectations but quotas were probably still not being met given where production was in its recovery.

Supply Recovering From Multiple Directions

Three separate supply trends are weighing on prices:

• Gulf exports: Rose more than 3 million barrels in June from May, topping 10 million barrels per day, though still roughly 40% below pre-war levels

• OPEC total output: Jumped 3.3 million barrels per day month-on-month to 19.43 million barrels per day in June, recovering from its lowest level in more than two decades per a Reuters survey

• Russian exports: Crude shipments from western ports hit a record high in June and are expected to hold at that level in July after drone attacks on refineries by Ukraine forced Moscow to redirect oil from domestic processing to exports

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Hormuz Still In Focus

Commercial vessels have increasingly resumed using the Strait of Hormuz following an interim understanding between the US and Iran, with Iran allowing ships to pass and the US lifting its blockade on Iranian ports. Shipping volumes remain below pre-war levels and traders are still watching negotiations over the waterway's long-term status.