The Organization of the Petroleum Exporting Countries (OPEC) and seven other major oil-producing nations, collectively known as OPEC+, have agreed to increase their oil production targets for the fifth consecutive month.

According to reports from Reuters and AFP, OPEC+ member nations held a virtual meeting on July 5 (local time) and reached an agreement to increase oil production in August by 188,000 barrels per day compared to July.

In a statement, the seven nations announced, "As part of our joint efforts to promote oil market stability, we have decided to adjust production by 188,000 barrels per day in relation to the voluntary additional production cuts announced in April 2023."

OPEC+ implemented voluntary production cuts twice in 2023, but has been increasing production since last year by partially reversing those measures.

After pausing production increases in the first quarter of this year, the group has decided to raise output for four consecutive months starting in April, following the outbreak of the Iran war, which blocked the Strait of Hormuz, a key oil trade route.

The group has been increasing monthly quotas to stabilize the market in response to surging international oil prices.

However, actual oil production has instead decreased as crude oil export routes have been blocked.

According to OPEC data, production in three countries—Saudi Arabia, Iraq, and Kuwait—has fallen by 6 million barrels per day from the first quarter of this year through May.

Ole Hansen, an analyst at Saxo Bank, noted that the crude oil currently passing through the strait is from stored reserves, adding, "It will take time to resume production."

He projected, "Assuming the situation in the strait continues to normalize, we will see improvements in July, and the recovery will accelerate in August."

However, AFP pointed out that under this trend, the market could face a supply surplus next year.

Jorge Leon, an analyst at energy research firm Rystad Energy, stated, "Everyone is expecting a supply surplus next year."

While the market may be able to absorb the supply for the time being as countries begin to replenish oil inventories depleted during the period when the Strait of Hormuz was blocked, downward pressure on prices due to increased production could emerge afterward.

AFP predicted that if this happens, OPEC+, whose influence has already weakened following the withdrawal of the UAE in May, will face the challenge of managing price declines amid demands from member nations to increase production.

It is reported that Iraq, one of the member nations, is already pressuring the group, emphasizing that it has suffered losses due to its inability to export oil because of the war, and threatening to withdraw if its oil production quota is not increased.