Oil Prices Dip After OPEC+ Agrees to Increase Production Targets

Oil prices saw a slight decline on Monday after the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) agreed on Sunday to increase output targets from August. The recovery of exports from key producers through the Strait of Hormuz also contributed to the downward pressure on prices.

By 0408 GMT, Brent crude futures had fallen by 34 cents, or 0.47 per cent, to $71.78 a barrel. US West Texas Intermediate (WTI) crude was down 20 cents, or 0.29 per cent, at $68.49 a barrel.

The OPEC+ group, which includes Russia, will raise its output targets by 188,000 barrels per day (bpd) starting in August. This follows similar increases implemented for June and July. However, analysts note the increase has been largely theoretical due to the recent conflict between a US-Israeli coalition and Iran, which disrupted tanker traffic in the Strait of Hormuz for major producers like Saudi Arabia, Kuwait, and Iraq.

Despite the disruptions, Gulf members have started to revive supplies and increase exports. According to a Reuters survey, OPEC’s oil output in June rose by 3.3 million bpd compared to the previous month, reaching 19.43 million bpd. Gulf oil exports in June also increased by over 3 million barrels from May, exceeding 10 million bpd, though this volume remains 40 per cent below pre-conflict levels.

The United Arab Emirates (UAE) officially left OPEC on May 1.