Saudi Arabia, Russia, Kuwait and other major oil-producing countries have agreed to increase crude oil output starting in June.
According to the Organization of the Petroleum Exporting Countries (OPEC) on Tuesday, seven member states of OPEC+ — a broader grouping of OPEC and other major producers — announced the decision in a joint statement. The seven countries are Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman.
AFP reported that "these countries have agreed to add 188,000 barrels per day to their total production quota starting in June, in connection with the 'additional voluntary production adjustment' policy announced in April 2023," adding that the move "fulfills a joint commitment to support oil market stability."
The daily production increases allowed for each country are 62,000 barrels each for Saudi Arabia and Russia, 26,000 barrels for Iraq, 16,000 barrels for Kuwait, 10,000 barrels for Kazakhstan, 6,000 barrels for Algeria and 5,000 barrels for Oman. The seven countries plan to hold a meeting on the seventh of next month to review oil market conditions and compliance with production cuts, and will convene monthly meetings going forward.
Although not explicitly mentioned in the joint statement, the decision to raise output is seen as a response to the United Arab Emirates' announcement that it would withdraw from OPEC and OPEC+ effective the first of this month. With the UAE, a major oil producer, following Qatar's 2019 exit from OPEC, analysts expect the Saudi-led group's influence to take an inevitable hit.
OPEC and OPEC+ have regulated international oil prices by limiting production through country-by-country quotas. However, following the UAE's exit, the group has introduced a policy allowing partial output increases to prevent a chain of further withdrawals.
Still, it remains unclear whether the decision to raise output will bring down oil prices, which have surged due to the closure of the Strait of Hormuz. Most of the countries that can expand production are Gulf states, and they are currently struggling to export crude because of the strait's closure.
Meanwhile, Iran — whose crude export routes have been blocked by the U.S.-led closure of the Strait of Hormuz — has begun reducing output as its oil storage facilities rapidly fill up, Bloomberg reported Monday.
