The OPEC+ countries have decided to make a slight increase in oil production quotas in June this year. This decision was made after the United Arab Emirates exited the organization and marks the third consecutive increase in quotas since the closure of the Strait of Hormuz. Despite this, the actual increase in production will remain mostly formal, as ongoing hostilities in the region continue to affect physical supply volumes from the Persian Gulf.
This is reported by Finway
Details of the OPEC+ decision and new quotas
The updated agreement states that seven OPEC+ countries — Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia, and Oman — will raise their oil production targets by 188,000 barrels per day in June. This is already the third monthly increase, taking into account the UAE’s exit and the corresponding adjustment of production shares.
According to experts, the increase in quotas is more symbolic in nature. It aims to demonstrate OPEC+’s ability to influence the market and emphasize that the organization continues to operate as usual, despite the exit of a significant player — the UAE.
“OPEC+ sends a dual-layered signal to the market: continuity despite the UAE’s exit, and control despite limited physical influence,” said Rystad analyst and former OPEC official Jorge Leon.
Analysts note that the actual increase in production may remain minimal due to the blockade of the Strait of Hormuz. Thus, it is not so much about additional barrels as it is about reaffirming OPEC+’s role in regulating the market.
New composition of the organization and further steps
After the UAE’s exit, OPEC+ now consists of 21 countries, including Iran. However, in practice, only seven states (including the UAE before its exit) participated in monthly decisions regarding production quotas.
According to the new agreement, Saudi Arabia’s quota — the leading producer in the organization — will rise to 10.291 million barrels per day in June, although in March the kingdom’s actual production was only 7.76 million barrels per day.
The next OPEC+ meeting is scheduled for June 7, where further steps regarding oil production amid market instability are expected to be discussed.
It was previously reported that the United Arab Emirates announced its exit from the Organization of the Petroleum Exporting Countries (OPEC) effective May 1.