Gulf producers drive OPEC output rebound after US-Iran deal

OPEC’s crude oil production rose sharply last month as Persian Gulf members restored exports through the Strait of Hormuz following a peace accord between the United States and Iran, according to a Bloomberg survey.

Output from the Organisation of the Petroleum Exporting Countries increased by 2.34 million barrels per day to 18.75 million bpd, driven primarily by higher production in Kuwait, Saudi Arabia and Iran. Despite the rebound, overall output remains significantly below prewar levels.

Even before the agreement, Gulf producers had managed to move limited volumes through the strait, which was largely closed during the early phase of the conflict. With the US-Iran deal now enabling more open transit, Saudi shipments have recovered to about 90% of typical levels, according to tanker-tracking data.

The increase in supply comes at a time of subdued fuel demand in China, a key consumer, contributing to a surplus in parts of the global market. This has erased much of crude oil’s wartime price rally and raised questions about whether OPEC producers may need to compete more aggressively for buyers. Brent crude futures were trading near $72 a barrel on Friday, July 3.

OPEC’s June production still stood 7.3 million bpd, or 28%, below February levels when adjusted for the United Arab Emirates’ exit from the group.

The UAE withdrew from OPEC in May, giving it greater flexibility to increase output once conditions in the Strait of Hormuz fully stabilise. Iraq has also signalled potential discontent, briefly warning it could leave the organisation unless granted a higher production quota.

OPEC+ policy outlook

Key members of the broader OPEC+ alliance, which includes countries such as Russia, are scheduled to hold a monthly video conference on Sunday to review production limits for the coming month.

A subgroup of seven countries within the alliance has implemented a series of modest, largely symbolic output increases during the conflict, continuing a gradual process of restoring production cuts introduced several years ago. Two delegates indicated this week that another incremental quota increase of 188,000 bpd is expected in August, marking the penultimate step in that schedule.

Country-level production

Kuwait recorded the largest increase among OPEC’s 11 members in June, raising output by 870,000 bpd to 1.36 million bpd. The country’s production had previously been reduced by about 80% during the conflict and remains well below normal levels.

Saudi Arabia posted the second-largest gain, increasing output by 550,000 bpd to an average of 7.2 million bpd. Iran followed, boosting production by 510,000 bpd to 2.85 million bpd, although it has accumulated significant volumes in floating storage as it faces difficulties securing buyers.

Within the wider OPEC+ group, Russia has increased crude exports to record levels in the wake of Ukrainian strikes on its refineries, potentially redirecting volumes that cannot be processed domestically.

The Bloomberg survey is based on ship-tracking data, information from industry officials, and estimates from consultants including Rapidan Energy Group, FGE NexantECA, Kpler Ltd. and Rystad Energy.

By Tamilla Hasanova