Oil prices hover near pre-conflict levels as OPEC+ boosts output again

Oil prices hovered near pre-conflict levels Sunday after OPEC+ agreed to increase production again, adding to global crude supplies as exports through the Strait of Hormuz continued to recover following months of disruption.

The oil-producing alliance said it will raise output targets by 188,000 barrels per day beginning in August, marking its third consecutive monthly increase as it gradually unwinds production cuts implemented in 2023.

The decision reflects easing concerns about a lingering global supply crunch. Oil exports from the Persian Gulf have begun rebounding after the Strait of Hormuz — a critical shipping lane for global energy supplies — reopened after it was disrupted during the U.S.-Israeli conflict with Iran. 

A U.S.-brokered memorandum of understanding between Washington and Tehran has also helped calm markets and reinforced expectations that supplies will continue to normalize.

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Brent crude traded near $72 per barrel Friday, down sharply from highs above $120 reached during the conflict and roughly back to levels seen before the United States and Israel launched strikes against Iran in late February.

Oil prices have also faced pressure from weaker-than-expected crude demand in China, increased production from countries outside the Middle East and a coordinated release of strategic petroleum reserves by the International Energy Agency.

The latest increase follows similar production hikes in June and July. The seven core producers managing OPEC+'s supply policy — Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman — have now restored nearly 800,000 barrels per day of production since April.

Despite those increases, actual output remains below levels seen before the conflict because disruptions to Gulf exports temporarily curtailed shipments from several major producers, including Saudi Arabia, Kuwait and Iraq.

OPEC+ is also navigating internal challenges after the United Arab Emirates exited the alliance earlier this year, while Iraq has pushed for a larger production quota. If the group approves another increase at its next meeting on Aug. 2, it will have fully reversed the production cuts adopted in 2023.

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Investors will now be watching whether recovering exports, stronger demand and future OPEC+ production decisions keep crude markets balanced through the remainder of the year.