Opec+ has agreed to increase crude oil output for a sixth consecutive month in September, as the Middle East teeters on the verge of an all-out war, and Houthi rebel attacks on Red Sea shipping compound threats to global energy supplies.
The group said on Sunday it is set to collectively add 188,000 barrels per day in September, the fourth straight month in which it will increase its output by the same level.
Seven core countries of the Opec+ group – Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman – agreed to raise production next month as they met virtually and said they would review global market conditions and outlook.
Before that, Opec+ had agreed to raise production by 206,000 bpd each month for April and May – prior to the UAE making an exit from the cartel – as the group aimed to unwind 1.65 million bpd of production cuts agreed in 2023.
The rise in crude production in September would end the voluntary cuts agreed in 2023, when the UAE was part of the group.
The seven countries also noted that this measure will provide "an opportunity for the participating countries to accelerate their compensation", Opec+ said in a statement.
The countries are set to meet next on September 6. They will continue to hold monthly meetings to review market conditions, the oil group added.
Difficult times
Opec is facing difficult times ahead amid a weakening oil outlook and resistance from its members, including Iraq, who want higher production quotas aligned with their capacity.
In July, Iraqi Prime Minister Ali Al Zaidi said that he wanted a "fair share" for his country from Opec as Baghdad seeks to boost its oil revenues to fuel its battered economy.
"Iraq is one of the founding members of Opec ... our right is to receive a fair share for Iraq," Mr Al Zaidi told reporters during a bilateral meeting at the White House.
Uneasy pause
Opec's latest move comes amid the uneasy pause in the start-stop US-Iran war that is on the verge of turning into an all-out conflict between the warring parties.
US President Donald Trump on Sunday said he halted military strikes on Iran, after the country and others in the Middle East urged Washington to delay attacks, saying the “perimeters of a deal” had been agreed.
In a post on social media, Mr Trump said the US had been prepared to launch a major military operation against Iran but had decided to stand down while negotiations took place.
"We were locked and loaded and ready to go against the Islamic Republic of Iran, at levels of military terror, strength, and power not seen since World War II," he wrote.
"Despite this, we have just been asked by Iran, and other Middle Eastern countries, to hold off any attack in that the perimeters of a deal has been agreed to. This would include the immediate, complete, and total opening of the Hormuz strait, and an end to Iran's nuclear threat."
Washington and Tehran earlier agreed to a 60-day ceasefire and signed a 14-point agreement as a framework to negotiate an end to the war.
However, that agreement unravelled and the two sides resumed retaliatory strikes for 13 consecutive nights in July.
On the edge
The conflict has kept the global crude oil market on edge.
Crude prices have significantly declined from wartime highs, going back to pre-conflict levels after the initial ceasefire deal, but have shot up again with the latest flare-up.
Oil prices closed July with the largest monthly gains since March. Brent, the benchmark for two-thirds of the world’s oil, surged 24 per cent and WTI climbed 21 per cent.
There remains little shipping traffic in the Strait of Hormuz, the vital chokepoint through which a fifth of the world's oil and gas passed before the conflict began on February 28.
The entry of Yemen’s Houthi rebels into the conflict, with a blockade of Saudi shipping in the Red Sea and attacks on oil tankers passing through the Bab Al Mandeb strait, has added another layer of uncertainty to the global energy supply dynamics.
