Opec+ lifts quotas to steady oil markets

Saudi Arabia, Russia and five other Opec+ producers agreed on Sunday to raise their collective oil production quota by 188,000 barrels per day from June, pressing ahead with a planned supply increase despite severe disruption to Gulf exports and the UAE’s exit from the alliance.

The decision was taken at a virtual meeting of Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman, the seven countries that remain part of an additional voluntary supply-cut framework first announced in 2023. The increase marks another step in the gradual unwinding of those curbs, but its immediate impact on physical oil supply is likely to be limited while shipping through the Strait of Hormuz remains constrained.

Opec+ framed the move as part of its continuing effort to maintain market stability, but the timing gives the decision a wider political and strategic significance. The UAE left Opec+ on May 1 after years of tension over production baselines and capacity ambitions, removing one of the group’s largest Gulf producers from the quota system. Sunday’s agreement appeared designed to show that the alliance can still co-ordinate policy without Abu Dhabi.

Saudi Arabia’s quota will rise to about 10.291 million barrels per day in June, although actual production has been running far below formal targets because of export constraints linked to the Hormuz crisis. Iraq and Kuwait have also faced sharp limitations, with available export routes under pressure and tanker traffic disrupted across one of the world’s most important energy corridors.

The Strait of Hormuz normally handles a major share of seaborne crude and liquefied natural gas shipments from the Gulf. Disruption there has pushed Brent crude well above levels seen before the conflict escalated, with traders pricing in risks to supply, insurance, freight and refinery feedstock availability. The rise in crude prices has deepened concerns over fuel inflation, especially for aviation, shipping and energy-intensive manufacturing.

For oil consumers, the quota increase offers limited relief unless barrels can reach the market. For Opec+, however, the decision serves a different purpose. It signals that the core producers intend to preserve the alliance’s operating structure, continue monthly reviews and retain the option to adjust supply if export conditions improve. The next meeting is scheduled for June 7, when the group is expected to reassess market conditions and compliance.

The UAE’s departure has changed the balance inside the alliance. Abu Dhabi has invested heavily in expanding production capacity and had long sought a higher baseline to reflect those investments. Its exit gives it greater room to shape output policy independently once export routes normalise, while placing greater responsibility on Riyadh and Moscow to hold the remaining Opec+ framework together.

Russia’s role remains central, both because of its production scale and because Opec+ has depended on Saudi-Russian alignment since the expanded alliance became a dominant force in oil policy. Moscow has faced sanctions, shipping restrictions and price-cap pressure, yet continues to use Opec+ co-operation as a way to influence market expectations. Saudi Arabia, by contrast, has sought to defend revenue stability while managing the economic demands of Vision 2030 projects and energy-transition investment.

Iraq, Kazakhstan and other members have often drawn scrutiny over uneven compliance with agreed limits. Sunday’s communique reaffirmed commitment to market stability, but the deeper challenge lies in enforcement once export constraints ease. Higher quotas may reduce political strain among producers seeking more revenue, yet any uncontrolled surge in supply could weaken prices when the Hormuz risk premium fades.

Demand signals remain mixed. Oil consumption has been supported by aviation growth, petrochemical demand and resilient emerging-market fuel use, but slower industrial activity in parts of Europe and Asia has kept forecasts under review. Refiners are also dealing with higher crude costs, volatile product margins and uncertainty over cargo availability.