7 OPEC+ countries agree to expand monthly oil production modestly as prices slide

A Kuwaiti oil worker talks on his radio at Mina Abdulah Oil Refinery, 50 Km South of Kuwait City in this file photo taken April 2005.

NEW YORK —A handful of countries in the OPEC+ oil-producing alliance plan to increase their outputs modestly next month, which would bring more oil online after fuel prices have fallen to levels not seen since before the U.S. and Israel’s war with Iran.

The Organization of the Petroleum Exporting Countries and its allies -- collectively known as OPEC+ -- announced on Sunday that seven countries would expand oil production by a combined total of 188,000 barrels per day in August. It was the fifth consecutive month OPEC+ agreed to raise oil outputs.

The participating countries in Sunday’s decision are Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman.

“The countries will continue to monitor and assess market conditions, and in their continuous efforts to support market stability, they reaffirmed the importance of adopting a cautious approach,” the group of oil producers said in a statement.

In the last month, market optimism caused crude oil prices to tumble before and after the U.S. and Iran reached an interim deal to end their fighting. As part of a broader memorandum of understanding, Iran agreed to allow ships to pass unimpeded through the Strait of Hormuz, and the U.S. agreed to end its blockade of Iran’s ports.

More and more commercial vessels have since transited the strait, which before the war was a conduit for roughly a fifth of the world’s oil. But ship traffic remains below pre-war levels, and tensions over the waterway continue. Iran’s joint military command warned as recently as Thursday that all oil tankers moving through the strait must use its approved routes or face a “forceful response.”

Oil prices have continued to decline while negotiators for Iran and the U.S. try to reach a final peace agreement. Brent crude, the international benchmark, was going for under US$72 a barrel when shortly after commodities trading opened Sunday night. That’s close to what it cost before the U.S. and Israel launched strikes on Iran in late Feburary -- and far below soaring prices that in March climbed to nearly $120 per barrel.

The war created an energy crisis in much of the world. With most shipping blocked in the Strait of Hormuz, the limited production hikes pledged by OPEC+ in previous months could not counteract the impact on global oil supplies.

Early in the war, many major oil producers across the Middle East had to cut production because their crude had no where to go. S&P Global Energy said in a recent estimate that it did not expect Gulf oil production to rebound fully until at least the first quarter of 2027.

Energy experts have repeatedly warned that fuel prices and the cost of consumer good were likely to stay elevated long past the conflict’s end.

Wyatte Grantham-philips, The Associated Press