OPEC+ raises oil quotas as traders weigh glut risk
OPEC+ will add 188,000 barrels a day from August as Gulf exports recover and analysts warn that supply may outrun demand.
By Maya Lindqvist · Senior Technology Correspondent
3 min read
OPEC+ has agreed to lift oil production quotas again, adding more supply to a market that has moved from fears of disruption toward concern about oversupply. OPEC said the group will raise output by 188,000 barrels a day from August, its fifth straight monthly increase as members unwind earlier cuts.
Fortune reported that the decision brings the group’s quota increases to about 940,000 barrels a day since the war began. The shift comes as Gulf export flows recover and the reopening of the Strait of Hormuz has eased concerns that crude shipments could face major interruptions.
TradingView data cited by Fortune showed Brent crude trading around $72 a barrel, down from an April peak of $126 and near levels seen before the conflict. The price move reflects a market that is receiving more oil just as questions build over the strength of demand.
Gulf exports recover
Bloomberg reported that Saudi Arabia, the world’s largest oil exporter, shipped an average of 6.3 million barrels a day last week. That restored flows to nearly 90% of February’s pre-war level, according to Bloomberg figures cited by Fortune.
The United Arab Emirates has also increased shipments. Kpler data cited by Fortune showed UAE crude and condensate exports at 3.94 million barrels a day in June, above pre-war levels.
The UAE formally left OPEC+ on May 1, Fortune reported. Johannes Raubal, a senior oil analyst at Kpler, said the country has increased production since leaving the group and has also reduced crude inventories, which has added to export volumes.
Bloomberg reported that more than 60 million barrels of oil that had been effectively stuck after the war began have now reached the market after the signing of a U.S.-Iran memorandum of understanding. Bloomberg also reported that UAE oil has moved as far as the United States and has been offered to buyers in Hawaii.
Demand concerns focus on China
Morgan Stanley and Goldman Sachs analysts warned last week that the oil market could face a glut next year if producers keep raising output without matching demand growth, Fortune reported. China remains central to that outlook because it is the world’s largest crude importer.
Kpler data cited by Fortune showed that the Middle East usually supplies about half of China’s crude imports. Those shipments fell in April to their lowest level in almost a decade, according to Kpler.
Fortune reported that China has cut imports by roughly 5 million barrels a day compared with pre-war levels and has not yet sharply increased purchases. The Financial Times reported separately that China has increased buying from Middle Eastern producers in recent days, with Saudi Aramco discounts expected to support additional demand.
The next test for the market is whether recovering Gulf supply meets stronger buying or overwhelms it. For OPEC+, the latest quota increase extends a policy shift that could keep pressure on prices if demand does not catch up.
This story draws on original reporting from Fortune.