OPEC+ Approves Further Oil Output Increase as Hormuz Exports Start to Recover

 OPEC+ Approves Further Oil Output Increase as Hormuz Exports Start to Recover

**The cartel's fifth consecutive production hike adds 188,000 barrels per day starting in August, but the market barely blinked. Here's what the return of Gulf oil means for prices, geopolitics, and your wallet.**

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## Introduction: A Quiet Decision with Loud Implications

On Sunday, July 5, 2026, seven core members of OPEC+ met virtually and did exactly what the market expected: they approved another increase in oil production quotas . The group agreed to raise output by **188,000 barrels per day (bpd)** starting in August, marking the fifth consecutive monthly hike since the outbreak of the US-Israeli war with Iran .

But here's the catch: the market barely noticed.

Brent crude traded near **$72 per barrel** on Friday—back to prewar levels and down from peaks above $120 during the height of the conflict . The gradual reopening of the Strait of Hormuz has already been priced in, and traders are now focused on a different question: **how fast can production actually recover?**

The answer is more complicated than you might think.

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## The Numbers That Matter: What OPEC+ Actually Did

### Production Quotas vs. Reality

OPEC+ data tells a story of collapse and tentative recovery. The group's output fell from **42.77 million bpd in February** to a low of **33.13 million bpd in May** . The reason? Iran effectively blocked the Strait of Hormuz, cutting off exports from some of the most important OPEC+ members, including Saudi Arabia, Kuwait, and Iraq .

Production began to recover in June, but remains well below prewar levels. Here's the breakdown for key producers:

- **Combined production Saudi Arabia, Iraq, Kuwait**: Fell by roughly **6 million bpd** between Q1 2026 and May 

- **OPEC+ output (May 2026)**: 33.13 million bpd vs. 42.77 million bpd in February 

- **August quota increase**: +188,000 bpd 

- **Total quota increases April-July**: Nearly 800,000 bpd (mostly theoretical until now) 

The August increase means the seven core members—Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan, and Oman—are gradually unwinding a 1.65 million bpd production cut agreed in 2023 . After accounting for the UAE's departure from OPEC+ in May, about **379,000 bpd** of the original cut remains to be restored .

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## The Strait of Hormuz: From Blockade to Bottleneck

### Why Production Still Lags

The war forced Gulf producers to **shut in wells** when they could no longer export. Restarting that production is not as simple as flipping a switch.

"Shut-in production takes time to restart," said Ole Hansen, a commodity analyst at Saxo Bank . "Assuming shipping continues to normalise, July will show an improvement with August probably being the month where the pickup accelerates" .

The oil currently leaving the strait is mostly coming from **tankers and storage facilities**, not fresh production . That's a crucial distinction. It means the supply surge we're seeing now is a one-time drawdown of inventories, not a sustained increase in output.

**What's actually moving:** According to a U.S. official quoted by Bloomberg, oil supplies through the strait may have already exceeded **10 million barrels per day** . But much of that is trapped oil finally being released, not newly produced barrels.

### The UAE's Record Exports—and Why It's Misleading

The UAE, which quit OPEC+ in May, shipped a record volume of crude abroad in June—an average of **3.7 million bpd**, according to Kpler data, with Vortexa estimating volumes as high as **4 million bpd** .

But Johannes Rauball, a senior oil analyst at Kpler, cautions that the record volumes are "at least partially coming from oil kept in storage during the hostilities" . As storage drains and before production ramps up, volumes may weaken.

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## The Price Collapse: 43% and Counting

### From $120 to $72 in Four Months

The numbers are striking:

| Metric | Value |

|--------|-------|

| **Brent peak** | >$120/bbl (during war peak) |

| **Current Brent** | ~$72/bbl (prewar levels) |

| **Total decline** | ~43% |

| **WTI current** | ~$68.78/bbl |

The price collapse has been driven by multiple factors :

- Lower Chinese imports

- Higher exports from non-Middle East producers

- A record global strategic stock release coordinated by the IEA

- The US-Iran peace deal, which signaled that supply would eventually normalize

- Anticipation of the OPEC+ production increases now being implemented

"The group of seven kept unwinding their production cuts as widely expected," said Giovanni Staunovo, a commodity analyst at UBS. "The near-term focus will remain on how many tankers will manage to cross the Strait of Hormuz and how quickly demand and Chinese crude imports recover" .

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## The Human Element: What This Means for You

### At the Pump: Good News—For Now

The collapse in oil prices is already showing up at the gas station. National averages have dropped toward $4 per gallon, down from their May peak above $4.56. If crude prices remain in the $68-$72 range, further declines are likely.

But there's a catch. Wholesale gasoline prices can take weeks to fully reflect crude movements. And the summer driving season typically supports demand, which could slow the decline.

### For Investors: A Market That's Both Oversold and Uncertain

The technical picture suggests the selling may be overdone. Brent's 14-day relative strength index has dipped below 30, signaling that futures may be oversold . That suggests a short-term bounce is possible.

But the long-term outlook is clouded by supply uncertainty. Jorge Leon, an analyst at Rystad Energy, put it bluntly: **"For next year, everybody is anticipating a surplus"** .

Rebuilding inventories that countries tapped during the conflict should help absorb the flows at first, but producers may face a strong downward pressure on prices later on .

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## The Geopolitical Messy Middle: OPEC+ Cohesion and the Iraq Question

### The UAE Departure

The United Arab Emirates quit OPEC+ in late April, ending six decades of membership . The reason: Abu Dhabi wanted to align its capacity more closely with its production, free of production restraints imposed by the group .

The UAE has significant production capacity idled by the war to restart, and with ambitions to add more over time, could add pressure to prices and its former alliance counterparts .

### Iraq's Push for Higher Quotas

Iraq, OPEC's second-largest producer after Saudi Arabia, has signaled it wants a larger production quota to make up for the shortfall it incurred during the war . The Iraqi Oil Ministry has even suggested the country could consider leaving the group if denied a higher production limit .

**But the need for a higher quota "is not imminent,"** Hansen said, as production volumes are still far from pre-conflict levels . The issue is likely to become part of the 2027 capacity review, where OPEC+ will reassess members' quotas based on their ability to produce more .

### OPEC+'s Next Meeting

The group is scheduled to meet again on **August 2** to make further decisions for September . If they approve one more hike of similar size, they will have fully unwound the 2023 production cuts .

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## Frequently Asked Questions

### Q: Why is OPEC+ increasing production if oil prices are falling?

A: The increases were planned months ago as part of a gradual rollback of production cuts. The war delayed implementation, but with the Strait of Hormuz reopening, OPEC+ is following through. The market has already priced in these increases, which is why oil prices didn't react much to the announcement.

### Q: How much oil is actually moving through the Strait of Hormuz now?

A: According to U.S. officials, oil supplies through the strait may have already exceeded **10 million barrels per day** . However, much of that is oil that was stored in tankers during the conflict, not freshly produced barrels.

### Q: Will oil prices continue to fall?

A: Analysts expect supply to exceed demand next year, which could put downward pressure on prices . However, rebuilding inventories that were drawn down during the war will absorb some of the initial supply surge.

### Q: What about the UAE leaving OPEC+?

A: The UAE quit the alliance in May, frustrated with production restraints. It has already resumed record exports and could add pressure to oil prices if it continues to ramp up production .

### Q: What does this mean for U.S. gas prices?

A: Lower crude prices have already brought gas prices down toward $4 per gallon, with further declines possible. However, wholesale prices take time to reflect crude movements, so the full benefit may take weeks to reach the pump.

### Q: When is OPEC+'s next meeting?

A: The group is scheduled to meet again on **August 2, 2026**, to decide on production targets for September .

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## Conclusion: The Floodgates Are Opening—But Slowly

OPEC+'s decision to increase production quotas for a fifth consecutive month reflects a market in transition. The Strait of Hormuz is reopening, Gulf producers are gradually restarting output, and oil prices have returned to prewar levels.

But the recovery is far from complete. Shut-in production takes time to restart, and the oil currently moving through the strait is largely from stored inventories, not fresh output . Analysts expect production to improve in July, with August likely being the month where the pickup accelerates .

The bigger question is what happens next. With the UAE exporting record volumes outside OPEC+, Iraq pushing for higher quotas, and a supply surplus expected next year, the alliance faces significant internal and external challenges .

For American consumers, the collapse in oil prices has already brought welcome relief at the pump. For investors, the outlook is more nuanced: the market is both oversold in the short term and facing a bearish supply overhang in the medium term.

The "peace dividend" is real, but it's not guaranteed. As UBS analyst Giovanni Staunovo noted, the near-term focus will remain on "how many tankers will manage to cross the Strait of Hormuz and how quickly demand and Chinese crude imports recover" .

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## Disclaimer

**IMPORTANT:** This article is for informational and educational purposes only and does not constitute financial, investment, legal, or trading advice. The information contained herein is based on publicly available sources and reflects the author's understanding as of the publication date. Oil prices, geopolitical developments, and market conditions are subject to rapid change. You should consult with a qualified financial advisor before making any investment decisions.

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*Published: July 5, 2026*

**Tags:** OPEC+, oil production, crude oil, Strait of Hormuz, OPEC quotas, Brent crude, WTI crude, Saudi Arabia, Russia, UAE OPEC exit, Iraq OPEC quota, oil supply, energy markets, oil price forecast, OPEC meeting, Middle East oil, crude oil exports, oil market analysis