OPEC+ major oil producers decided to increase crude output starting in June. It is the first decision since the withdrawal of the United Arab Emirates, a core member.
OPEC+ said on the 3rd (local time) that seven countries — Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman — agreed to ramp up production by 188,000 barrels per day beginning in June.
The size of this increase is slightly smaller than May's hike of 206,000 barrels. However, this figure excludes volumes from the UAE, which left OPEC on the 1st of this month.
In a statement, OPEC+ described it as a "joint response to stabilize the oil market," and said production would be adjusted within the framework of the "additional voluntary production adjustment" agreed in April 2023.
International oil prices are showing high volatility due to the Middle East situation. Since the war in Iran, the Strait of Hormuz has been effectively blockaded, disrupting global crude supply.
However, some easing of tensions has been priced in recently after Iran conveyed a new peace plan to mediators. As of the 2nd, West Texas Intermediate (WTI) futures settled at $101.94 per barrel, down 3% from the previous day. Brent crude fell about 2% to $108.17.
Even so, oil prices remain elevated this year. WTI and Brent are up about 78% from the start of the year.
Market uncertainty has grown with the UAE's withdrawal. The UAE said last month that, after reviewing its domestic production policy and capacity, it determined leaving was in the national interest.
The UAE, a major member that wielded influence in OPEC for about 60 years, was the third-largest producer as of February, after Saudi Arabia and Iraq.
The decision to raise output is seen as a move to balance market stability and internal unity amid the twin variables of supply disruptions and member departures.