OPEC Output Climbs Again, But Still Trails Quota Targets

In July, OPEC's total oil production surged by 1.17 million barrels per day (bpd) compared to June, as Gulf producers restarted some output that had been halted for three months due to the closed Strait of Hormuz. The 11-member group's production rose to 19.85 million bpd in July, marking two consecutive monthly increases. This data, based on Reuters' survey, suggests a rebound from a record low in May, when production dropped to the lowest level since 2000.

However, the July figure still falls short of OPEC quotas. Iraq and Kuwait were the main drivers of the output surge, with Iraq recording the highest monthly rise. Iran also increased its production in July, benefiting from a brief period without a U.S. blockade targeting Iranian oil exports. Kuwait produced an estimated 1.971 million bpd in July, up from 1.65 million barrels in June, which in turn was up from just 580,000 bpd in May.

Despite the output increase, volumes remain below OPEC quotas due to shipping constraints in the Middle East. At OPEC's recent meeting, the group announced plans to raise production targets by another 188,000 bpd from September, effectively unwinding the final portion of the 2023 production cuts aimed at balancing the market. However, achieving this goal in practice may prove challenging due to ongoing security issues in the Persian Gulf.