Several OPEC+ countries plan to increase oil production moderately next month after fuel prices fell to levels not seen since before the US-Israeli war with Iran, the AP reports.
The Organization of the Petroleum Exporting Countries and its allies announced on Sunday that seven countries will increase oil production by a total of 188,000 barrels per day in August. It was the fifth consecutive month that OPEC+ has agreed to increase oil production.
The participating countries are Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman.
"The parties will continue to monitor and assess market conditions and, in their ongoing efforts to support market stability, they reaffirmed the importance of adopting a cautious approach," the oil producer group said in a statement.
Over the past month, market optimism has led to a collapse in crude prices before and after the United States and Iran reached an interim agreement to end their conflict. As part of a broader memorandum of understanding, Iran agreed to allow ships to pass through the Strait of Hormuz unhindered, and the United States agreed to end its blockade of Iranian ports.
Since then, more and more commercial ships have been passing through the strait, which before the war was a conduit for about a fifth of the world’s oil. But shipping traffic remains below pre-war levels and tensions along the waterway continue. Iran’s Joint Military Command warned as recently as Thursday that all oil tankers passing through the strait must use approved routes.
Oil prices have continued to fall as negotiators for Iran and the United States try to reach a final peace deal. Brent crude, the international benchmark, was trading below $72 a barrel shortly after commodities trading opened on Sunday evening. That’s close to the price before the U.S. and Israel launched strikes on Iran in late February — and far below the soaring prices that climbed to nearly $120 a barrel in March.
The war has created an energy crisis in much of the world. With most shipping blocked in the Strait of Hormuz, limited production increases promised by OPEC+ in the months before have failed to offset the impact on global oil supplies.
At the start of the war, many major Middle Eastern oil producers had to cut output because their crude had nowhere to go. S&P Global Energy said in a recent assessment that it doesn’t expect Gulf oil production to fully recover until at least the first quarter of 2027.
Energy experts have repeatedly warned that fuel and commodity prices are likely to remain high long after the conflict ends.