OPEC+ Has Plan to Complete Series of Quota Hikes, Delegates Say

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(Bloomberg) — Key OPEC+ members aim to continue a series of oil quota increases over the next few months, completing the return of a layer of halted production — if only on paper — by the end of September, delegates said. 

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The group already formally agreed to restore about two-thirds of a 1.65 million barrels a day supply cutback that it made back in 2023. It plans to raise targets further and revive the final portion in three more monthly stages, even though major members can’t actually deliver such hikes while the Iran war blocks exports from the Persian Gulf, three delegates said. They asked not to be identified as the process is private.

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The alliance, led by Saudi Arabia and Russia, has been proceeding with modest and symbolic supply increases during the war. However, the world urgently needs additional oil to fill in a hole left by the conflict, which has caused a cumulative gap of more than 1 billion barrels and drained global inventories at a record clip. The shock has sent fuel prices soaring, heightening the risk of a global recession. 

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Before the war between the US-Israeli alliance and Iran erupted on Feb. 28, eight key members of the Organization of the Petroleum Exporting Countries and its partners were in the process of reviving crude production shuttered several years ago when they were attempting to deal with a glut.

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OPEC and Saudi Arabia’s energy ministry didn’t respond to requests for comment.

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From the beginning of this month, the sub-group’s ranks diminished by one, when the United Arab Emirates chose to quit OPEC following decades of membership, amid friction with group leader Saudi Arabia over limits the group imposes on how much countries can pump.

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Abu Dhabi’s departure didn’t prevent the remaining seven members from ratifying another modest and theoretical increase of 188,000 barrels a day for June during their latest monthly video conference on May 3. The next gathering, which will review production policy for July and possibly beyond, is set for June 7.

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Stripping out the UAE theoretically removes about 144,000 barrels a day from the original 1.65 million barrels a day cut.

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The war is currently preventing the coalition from realizing target additions agreed over the past few months, having forced several Middle East members to shutter vast swathes of output while the Strait of Hormuz is effectively blocked.

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Saudi Arabia reported to OPEC’s secretariat body in Vienna that its output plunged even further in April to just 6.3 million barrels a day, marking the lowest level since 1990, the organization said in a monthly report on Wednesday. Kuwait’s output is down to just a quarter of pre-war levels, and Iraq and the UAE have also suffered considerable losses.

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Yet the twin crises of the war and the UAE’s shock departure aren’t stopping the alliance from preparing for the years ahead.

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OPEC+ remains engaged in a review of members’ individual maximum production capacity — commissioned last year — with a view to calibrating output quotas on a more accurate basis in 2027, three delegates said. The assessment is being conducted by Dallas-based consultant DeGolyer and MacNaughton Corp.

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