In July, the OPEC+ coalition, which includes Russia, increased its maximum oil production level by 188,000 barrels per day (b/d), mirroring the adjustments made the previous month. Due to the blockade of the Strait of Hormuz, oil production in the Persian Gulf countries is constrained. However, the rise in quotas is expected to enable a future increase in supply without causing market shocks, according to experts. OPEC+ member countries, including Russia, have raised their permitted oil production levels in July by 188,000 b/d, as stated in the alliance's announcement. The quotas for June were similarly adjusted. In May, OPEC+ quotas were increased by 206,000 b/d, though this adjustment accounted for the UAE volumes, which announced its exit from OPEC and OPEC+ on April 28. [See “Ъ” dated April 29](https://www.kommersant.ru/doc/8625503). Russia and Saudi Arabia will be able to increase their oil production in July by 62,000 b/d each, reaching 9.82 million and 10.35 million b/d, respectively. The quota for Iraq in July has been raised by 26,000 b/d, to 4.37 million b/d; for Kuwait, it's increased by 16,000 b/d to 2.64 million b/d; for Kazakhstan, the quota goes up by 10,000 b/d to 1.6 million b/d; for Algeria, it's raised by 6,000 b/d to 995,000 b/d; and for Oman, by 5,000 b/d to 831,000 b/d. These figures do not account for the compensation schedule for previous excess production. The OPEC+ announcement states that the compensation period is extended until the end of December 2026. According to OPEC+, member countries of the alliance will continue to monitor and assess market conditions, emphasizing the importance of a cautious approach and maintaining full flexibility regarding increasing, suspending, or retracting voluntary production adjustments. Quotas for August will be determined at the OPEC+ meeting on July 5. Andrei Polishchuk, a senior analyst in the oil and gas and transportation sectors at Euler, believes that easing restrictions will continue at the same pace until September. “Afterward, a pause may be possible, and the cartel could return to reducing restrictions in 2027 if demand growth expectations are confirmed,” he notes. As reported by Argus, if OPEC+ countries continue to increase their quotas at the current pace, they will complete the reduction of the final package of voluntary restrictions by September. Argus points out that decisions to increase production targets are primarily a “theoretical exercise” for Saudi Arabia, Iraq, and Kuwait, which had to cut production due to the conflict in the Middle East and the closure of the Strait of Hormuz. An agency source noted that lifting restrictions should be viewed as groundwork for increasing production by these countries once the strait reopens. Argus estimates that in May, the total oil production of OPEC+ countries amounted to 29.53 million b/d, which is 9.6 million b/d lower than before the onset of military actions in the Middle East, primarily due to cuts in the Persian Gulf countries. According to Argus, in May, Saudi Arabia's oil production increased by 250,000 b/d from April to 6.57 million b/d but remained 3.66 million b/d below the target level. Iran's production fell by 300,000 b/d to 2.65 million b/d. Production in Russia, according to Argus, remained at 9 million b/d. Sergey Tereshkin, CEO of Open Oil Market, suggests that the increase in production levels will allow OPEC+ countries to boost supply after the opening of the Strait of Hormuz without destabilizing the market, as the increase will be within the previously announced framework. “Overall, this strategy is quite rational: it will allow for market share growth in the future without causing shocks, as seen in March 2020 during the initial collapse of the deal,” he states. In that year, Russia announced its exit from the OPEC+ deal, effective April 1, and a new agreement was reached starting May 1. Igor Yushkov, an expert at the Financial University, also believes that raising quotas to levels that pose no restrictions allows for the avoidance of market shocks in the future, especially following the opening of the Strait of Hormuz, when prices may indeed decline. Russia, the expert notes, has not fulfilled its quotas for several months due to a lack of investment in the industry and attacks on infrastructure, hence a return to production above 9 million b/d would be a positive outcome. Source: Kommersant