The OPEC+ alliance has agreed to raise production caps by 188,000 barrels per day starting in August 2026, in the fifth consecutive monthly increase, despite the apparent drop in global oil prices.

The decision came during a meeting of the seven main countries in the management of production quotas: Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman, while Brent crude fell to $71.87 and West Texas to $68.62, the lowest level since the outbreak of the U.S.-Israeli war on Iran.

The new increase gave Saudi Arabia and Russia the largest share at 62,000 barrels per day each, but the size of the increase, according to experts in the oil sector, remains limited compared to a market with more than 100 million barrels per day, which means that the decline in prices is not related to the decision alone, but to a combination of simultaneous factors.

Kepler and Vortexa data showed a rapid recovery in Gulf exports following a de-conflict agreement between Washington and Tehran and the resumption of shipping through Hormuz, with flows rising to more than 10 million barrels per day from 7 million in May, although still below pre-war levels.

Russia's exports hit record high

Russia's exports from Western ports hit record levels in June, driven by a drop in domestic refining as a result of Ukrainian attacks on refineries.

In contrast, data from the U.S. Energy Information Administration shows that U.S. inventories fell to 743.3 million barrels, the lowest level since 1984, contradicting the oversupply hypothesis reflected in current prices. Market analysts point out that prices are "driven by expectations as much as they are driven by actual supply," and that the real test will be seen in the upcoming weekly inventory report and the OPEC+ meeting on August 2.

The International Energy Agency (IEA) predicted a contraction in demand, reaching 1.1 million barrels per day (bpd) in 2026, while other estimates indicated a smaller contraction of 420,000 bpd due to the repercussions of the war on Iran, bringing global demand to about 104 million bpd.

These developments come after the UAE officially withdrew from the alliance last May, and in light of numerous Iraqi demands to raise its production quota under the threat of withdrawal from OPEC, which could complicate the global oil reality, as analysts saw that producers are "selling in a bear market," and that lower prices may stimulate demand in the longer term.

Iraq grants 26,000 barrels per day increase

Iraq's share of the planned increase for August 2026 reached about 26,000 barrels per day, raising the official and targeted production ceiling to 4.405 million barrels per day, compared to the July ceiling, placing Iraq in third place among the countries that received the largest expansion in production quotas, after Saudi Arabia and Russia.

The increase comes at a time when Iraq is demanding an increase in its quota in a pressing economic context, as the Ministry of Oil asserts that a review of the quota has become necessary to compensate for the sharp decline in exports and revenues, resulting from regional tensions and the interruption of supplies through the Strait of Hormuz over the past months.

Iraq is expected to reintroduce the quota review file during discussions on the 2027 plans, scheduled for the end of the year, in an effort to obtain a production quota that reflects its actual capacity and financial needs.

Iraq has a hand in the UAE's knees

A senior official in Iraq's oil ministry said in shocking remarks published on Thursday (June 25th) that Baghdad would be forced to study all options if it did not get a significant increase in its quota within OPEC, stressing that his country is facing a severe financial crisis caused by the Iran war and declining exports, making raising the quota "urgent."

According to reliable sources, Iraqi officials are considering the idea of withdrawing from OPEC, although the current plan remains to continue within the organization while seeking a larger production quota, with Oil Ministry spokesman Salem al-Rikabi stressing that Iraq will "make a decisive decision on whether to stay or leave" if its demands are not met.

The government of Ali Faleh al-Zaidi has previously stressed that Iraq cannot remain constrained by a quota that does not reflect its population size and production capacity, and this situation comes in light of unprecedented economic pressures after the military unrest and the closure of the Strait of Hormuz disrupted Iraq's exports for months, causing an export gap that exceeded 350 million barrels and losses estimated at about $37.7 billion.