OPEC+ cuts July crude output by 140,000 b/d after bumper June

OPEC+ crude output fell to 41.65 million b/d in July, the Platts OPEC+ Survey from S&P Global Commodity Insights showed Aug. 11, after contingency measures put in place to offset potential supply shocks from the Iran-Israel conflict led to a bumper month in June.

OPEC cut crude production by 190,000 b/d month over month in July -- driven by a 300,000 b/d drop by Saudi Arabia, which had increased production in June to protect against supply disruptions.

Non-OPEC allies added 50,000 b/d in July. Russia raised production by 70,000 b/d month over month, but continues to produce below its quota, which was set at 9.240 million b/d for July.

The group's output fell in the third month of an accelerated phase out of 2.2 million b/d of voluntary cuts implemented by Saudi Arabia, Russia, the UAE, Iraq, Kuwait, Kazakhstan, Algeria and Oman.

So far, only Saudi Arabia and the UAE have increased output significantly to take advantage of higher quotas, while Kazakhstan remains non-compliant due to the earlier-than-expected ramp-up by foreign companies at its huge Tengiz oilfield.

Factoring in these quota increases, countries with quotas produced 380,000 b/d below target in July, the survey showed.

Voluntary cutters have also committed to implementing compensation cuts for overproduction since the beginning of 2024. OPEC has not published updated compensation plans, but the last version made public in April indicated that they would total 455,000 b/d in July.

Iraq -- a serial overproducer -- has not boosted output in recent months, despite its cap increasing, in a bid to fast-track its compensation plan. Drone strikes on key fields in the semi-autonomous Kurdistan region took some production offline in July.

Meanwhile, Libya, one of the three countries exempt from quotas due to sanctions or political instability, saw output hit a new 12-year high in July of 1.25 million b/d. The country was plunged into crisis in 2011 following the fall of Moammar Qadhafi, hitting its vital oil output.

Price dynamics

OPEC+ is increasing quotas in a volatile price environment. Conflicts in the Middle East and Ukraine, as well as global trade tensions, have contributed to significant price swings in 2025, with highs of over $83/b in January and lows of $61/b in May. Platts, part of Commodity Insights, last assessed Dated Brent at $67.86/b on Aug. 8.

The group is pushing to capitalize on higher seasonal demand in the Northern Hemisphere summer to bring barrels back to market without causing price shocks.

On Aug. 3 the group of eight agreed to fully phase out their voluntary production cuts in September. In parallel, the UAE will complete phasing in a 300,000 b/d quota hike. They originally planned to phase in these quota increases over 18 months, but will now take just six.

They can make changes to these plans at any point and are next scheduled to meet to discuss market conditions, compliance and compensation on Sept. 7.

Many analysts expect a supply glut up to the end of 2025, triggering a significant erosion in oil prices, which could pressure the group to implement further cuts.