If ratified at a video conference on Sunday, seven major nations led by Saudi Arabia and Russia will add 188,000 barrels a day to their output target, the delegates said

Opec+ has a preliminary agreement for another modest oil quota increase in August, delegates said, raising the prospect of more supply eventually hitting the market again if a US-Iran peace pact can stick.  

If ratified at a video conference on Sunday, seven major nations led by Saudi Arabia and Russia will add 188,000 barrels a day to their output target, the delegates said. It would be in keeping with the group’s plan to finish reversing output curbs made a few years ago, and mean that, since the war began, they’ve added 940,000 barrels a day to quotas — equivalent to almost 1% of global demand. 

Those increases have so far been theoretical because the war blocked the Strait of Hormuz and stopped Persian Gulf members from ramping up exports and output. However, since an interim peace pact between Tehran and Washington, the Saudis and their neighbors have started to restore shipments, helping drive a surplus in key Asian markets. That’s erased oil’s war-time rally, and could trigger a contest among OPEC nations for customers.  

The Organization of the Petroleum Exporting Countries is already facing a challenge to its unity, after founding member Iraq last month suggested it could ultimately exit if denied a higher production limit. A similar grievance spurred the United Arab Emirates to quit in May.

Saudi Arabia and the UAE have restored oil exports to near pre-war levels, tanker-tracking data shows, thanks to both the peace accord and their success in getting cargoes through Hormuz. Still, their production levels remain well below normal rates, according to data compiled by Bloomberg. 

An Opec+ increase for August would mark the penultimate month in restoring two layers of production halted back in 2023, shuttered when the group was seeking to stave off a surplus and shore up prices. One more boost in September would complete the series. 

A third and final tranche of curbs is scheduled to remain in place until the end of the year. Even before Hormuz was closed, many members were struggling to pump as much as allowed due to physical capacity constraints, and so only part of this third tier would likely materialize.