OPEC+ hikes oil production quotas but stays mum on UAE pull-out
Summary
Seven major oil-producing countries in OPEC+ increased their oil production limits by 188,000 barrels per day for June to support market stability after the United Arab Emirates (UAE) left the group. Despite raising quotas, actual oil supply remains limited due to disruptions caused by the Middle East conflict and a blockade at the Strait of Hormuz.Key Facts
- Saudi Arabia, Russia, Algeria, Iraq, Kazakhstan, Kuwait, and Oman raised their oil production quotas by 188,000 barrels per day for June.
- The UAE quit OPEC+ recently and its oil production will no longer count toward group quotas.
- The increase in production quotas was expected and aims to show OPEC+ stability despite the UAE’s departure.
- Physical oil supply is limited because the Strait of Hormuz, a key shipping route, is blocked due to ongoing Middle East conflicts.
- OPEC+ members are producing about 9 million barrels per day less than their quota because of war disruptions, not because they are holding back production on purpose.
- Iran is an OPEC+ member but does not follow production limits and faces its own export blockades from the United States.
- Russia benefits from the situation but struggles to meet its production quota due to its conflict in Ukraine and attacks on its oil facilities.
- The UAE plans to increase oil production significantly by 2027 and will spend $55 billion on new oil projects in the next two years.
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