La Jornada: OPEC+ increases the crude oil quota by 188 thousand bpd

London. OPEC+ agreed to a modest increase in crude oil production for June, an increase that will remain largely on paper as the war in Iran continues to affect oil supplies from the Persian Gulf through the Strait of Hormuz.

Seven OPEC+ countries will increase their production targets by 188 thousand barrels per day (bpd) in June, the third consecutive monthly increase, the organization reported in a statement after an online meeting. The increase is similar to that agreed for May, discounting the quota of the United Arab Emirates, which left the group on May 1.

The measure is intended to demonstrate that the group is willing to increase supply once the war ends and signals that OPEC+ is moving forward with a “business as usual” approach despite the departure of the United Arab Emirates, according to group sources and analysts.

Paper increase

“OPEC+ is sending a double message to the market: continuity despite the UAE’s exit and control despite the limited physical impact,” said Jorge León, a Rystad analyst and former OPEC official.

“Although production is increasing on paper, the real impact on physical supply remains very limited given the Strait of Hormuz restrictions. It is not so much about adding barrels as sending the signal that OPEC+ continues to call the shots,” he added.

The quota of Saudi Arabia, the main OPEC+ producer, will increase to 10.291 million bpd in June according to the agreement, well above actual production. The kingdom reported to OPEC a real production of 7.76 million barrels per day in March.

The seven members who met this Sunday were Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia and Oman. With the departure of the United Arab Emirates, OPEC+ has 21 members, including Iran. However, in recent years only these seven nations, plus the Emirati country, have participated in monthly decisions on production.

Crude oil production by all OPEC+ members averaged 35.06 million bpd in March, 7.7 million less than in February, OPEC indicated in a report last month, with Iraq and Saudi Arabia making the biggest cuts due to export restrictions.

The seven members of OPEC+ will meet again on June 7, according to the statement.