The Organization of the Petroleum Exporting Countries on Sunday agreed to increase oil production by 188,000 barrels per day for July, the fourth consecutive monthly increase, even as the Strait of Hormuz remains closed due to the ongoing war in Iran, making it nearly impossible to ship the additional crude.
The Strait of Hormuz, through which 20% of the world’s oil supply ordinarily passes daily, has been closed since early in the war as part of Iran’s effort to counter the war launched by the United States and Israel in February, according to reports from The New York Times and The Wall Street Journal. Experts have called the production increase largely symbolic because the waterway remains shut, those outlets reported.
The OPEC members that agreed to the increase include Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman, the group said. The countries agreed to the increase as part of the group’s “commitment to support oil market stability” and said the latest production increase would also allow the participating nations to “accelerate their compensation,” OPEC said in a statement.
“The countries will continue to closely monitor and assess market conditions, and in their continuous efforts to support market stability, they reaffirmed the importance of a cautious approach,” the group said in the statement.
The Trump administration continues to negotiate an end to the war that would lead to the reopening of the Strait, in addition to working to limit Iran’s ability to build a nuclear weapon, amid a shaky weeks-long cease-fire. MSI previously reported that oil prices rose over 3% on fresh U.S.-Iran strikes and deal uncertainty on June 1, and that analysts warned of a summer supply crunch as talks stalled. Oil rises as U.S.-Iran talks stall, analysts warn of summer supply crunch