OPEC+ ministers increased oil quotas by 188,000 barrels per day for July, but analysts believe this will have little impact on rising prices due to the Mideast war.
Jorge Leon, analyst at Rystad Energy, stated that the increase “means very little while the Strait of Hormuz remains closed.”
He added: “The market is not short of quota announcements; it is short of physical barrels that can actually move. In that sense, the 188,000 barrels per day increase would be more of a policy signal than a real supply boost.”
The increase was similar to ones decided in previous months.
The OPEC+ statement said the latest agreed hike was “to support oil market stability” but that the seven countries also saw an opportunity “to accelerate their compensation” in a time of historically high oil prices.
It added that the ministers “reaffirmed the importance of adopting a cautious approach and retaining full flexibility to increase, pause, or reverse the phase-out of the voluntary production adjustments, including reversing the previously implemented voluntary adjustments announced in November 2023.”
According to Leon of Rystad Energy, OPEC+ is concerned that the Mideast war may alter Iran’s stronghold on the Strait of Hormuz and weaken it.
“When the Strait of Hormuz reopens, the market could move very quickly from fear of shortage to fear of surplus,” he said.
“Returning OPEC+ supply, a stronger US shale response and weaker demand after a period of very high prices could leave the market with a very large oversupply problem,” he said.
