OPEC output rebounds as Gulf supplies return

OPEC crude production experienced a significant surge in July as Gulf producers revived output halted by the Iran war and restrictions on tanker movements through the Strait of Hormuz. The Organization of the Petroleum Exporting Countries saw an increase of approximately 1.17 million barrels per day, bringing the total to 19.85 million barrels per day.

Iraq led the way with the largest monthly increase, followed by Kuwait, while Iran also raised its supply despite facing renewed export constraints. Saudi Arabia's output decreased slightly. These figures highlight the extent of the recovery since May, when OPEC production reached its lowest monthly level in at least 26 years, surpassing the production declines seen during the Covid-19 crisis.

The United Arab Emirates has since left OPEC, reducing the organization's membership to 11 countries. Iraq's rebound was particularly noteworthy since its production had fallen well below its assigned OPEC+ target. Kuwait contributed substantially with its supply, and Iran managed to increase exports for part of the month, although a US blockade on Iranian ports slowed shipments again.

Libya also increased its output, remaining largely unaffected by the shipping constraints affecting Gulf producers. The July gains followed a substantial improvement in June, with global oil supply jumping by 4.1 million barrels per day to 98.8 million bpd. However, OPEC+ members were still producing below their agreed quotas, and disruptions prevented the full delivery of the additional barrels theoretically available.

The wider OPEC+ alliance agreed to make a further production adjustment of 188,000 barrels per day for September, with further reassessment of market conditions and supply restoration expected at their meeting on September 6. Meanwhile, global oil consumption is projected to recover to around 104.8 million barrels per day by 2027, with demand forecasts becoming less supportive.