The planned increase confirms Opec+ is treating its monthly quota schedule as fixed policy rather than a lever to cool prices, even with Brent above $100 and a second chokepoint now under threat. Because Saudi, Iraqi and Kuwaiti output remains constrained by the wider conflict, the nominal hike is unlikely to translate into meaningfully more crude reaching buyers in September. That keeps the physical market tight regardless of the headline figure, and leaves price direction dependent on how the Red Sea and Strait of Hormuz situations evolve rather than on anything decided at the August 2 meeting. Traders are likely to treat the announcement as background noise until actual loadings data proves otherwise.
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Opec+ looks set to keep raising quotas on autopilot, even though a fresh Red Sea flare up means most of that extra oil cannot actually reach the market.
Summary:
- Seven core Opec+ members, Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman, are expected to raise the September output target by about 188,000 bpd
- The planned increase matches the increments already applied in June, July and August, continuing a gradual and largely pre-scheduled unwind
- The decision is due at the group’s meeting on August 2
- The plan comes even as Brent crude jumped 7 percent to above $100 a barrel and WTI rose more than 6 percent to above $92, following Houthi attacks on two Saudi tankers in the Red Sea
- The wider conflict continues to constrain how much some members can physically pump, meaning the quota increase may again be largely symbolic
- Brent is now up close to 40 percent for the month of July
Opec+ is expected to press ahead with another output increase in September, adding roughly 188,000 barrels a day to its collective quota even as crude prices surge past $100 a barrel on fresh supply disruption in the Red Sea. Three sources familiar with the discussions said the seven core members of the group, Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman, are set to confirm the increase at their meeting on August 2, matching the size of the hikes already applied for June, July and August. Reuters had the info overnight.
The timing underscores how disconnected the group’s formal quota policy has become from the physical realities of the market. Brent crude jumped 7 percent on Thursday to $100.66 a barrel, its highest level in nearly two months, after Yemen’s Houthi forces claimed missile and drone strikes on two Saudi tankers in the Red Sea, opening what analysts describe as a second chokepoint alongside the already disrupted Strait of Hormuz. West Texas Intermediate rose more than 6 percent to above $92, trading above $90 for the first time since June. Brent has now climbed close to 40 percent this month alone.
Despite the scale of the price move, Opec+’s response has remained mechanical. The group has continued adding to its quotas on a near identical monthly schedule since the conflict began, treating the process as a gradual unwind of prior voluntary cuts rather than a tool to manage the current spike. That approach reflects a persistent problem for the group: several of its most important members, including Saudi Arabia, Iraq and Kuwait, have had their actual export capacity constrained for months by the conflict, meaning increases on paper have frequently failed to show up as increases in physical barrels reaching buyers.
The latest escalation only deepens that gap. With Bab el-Mandeb crossings already falling sharply and tankers rerouting away from Saudi ports, any September quota increase risks being similarly symbolic unless shipping conditions improve materially before then. For now, the market’s attention is likely to stay fixed on how the Red Sea situation develops rather than on the mechanics of Opec+’s next announcement, with the August 2 meeting more a formality to confirm existing plans than a genuine policy decision point.
This article was written by Eamonn Sheridan at investinglive.com.