New Delhi, July 5 (IANS) OPEC+ is expected to consider another modest increase in oil production quotas for August as the alliance continues unwinding earlier supply cuts, with delegates indicating that seven key producers have reached a preliminary agreement ahead of a virtual meeting on Sunday.

According to delegates, the proposed increase would raise the combined production target of seven major producers, led by Saudi Arabia and Russia, by 188,000 barrels per day if approved during the video conference.

The move is in line with the group’s strategy to gradually reverse production curbs introduced in 2023 to support oil prices. If implemented, the latest increase would bring the cumulative quota additions since the policy reversal began to around 940,000 barrels per day, equivalent to nearly 1 per cent of global oil demand.

While previous production increases remained largely on paper due to disruptions caused by the conflict in the region and the closure of the Strait of Hormuz, the recent interim peace agreement between the United States and Iran has enabled major Gulf producers to restore exports and output.

Saudi Arabia and the United Arab Emirates have already brought oil exports close to pre-conflict levels, according to tanker-tracking data, aided by improved shipping access through the Strait of Hormuz following the easing of tensions.

The return of additional supplies has contributed to a surplus in key Asian markets, reversing the sharp rise in oil prices witnessed during the conflict and increasing the possibility of intensified competition among OPEC producers for market share.

The production decision also comes at a time when OPEC+ is facing internal challenges. Iraq, one of the organisation’s founding members, recently indicated that it could eventually consider leaving the group if it is not granted a higher production quota. The United Arab Emirates had previously exited the alliance in May following similar concerns over production limits.

If approved, the August increase would represent the penultimate phase of restoring two layers of production cuts implemented in 2023, with one final increase expected in September to complete the process.

–IANS

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