OPEC+ to Reevaluate Production Cuts as Brent Crude Prices Falter

OPEC maintained steady oil production in July, averaging 26.99 million barrels per day—a slight decrease of 60,000 bpd from June levels, according to a Bloomberg survey. 

Venezuela and Iran accounted for most of the 60,000 bpd dip, with both countries experiencing decreased demand from China. OPEC and its allies held a monitoring meeting earlier this week as the group hopes to gradually unwind its production cuts starting in Q4. OPEC has cautioned, however, that any changes to its planned supply increases will depend on market conditions.

Despite escalating geopolitical tensions in the Middle East, crude futures have declined, leaving Brent crude below $80 a barrel. This drop poses challenges for OPEC+ nations, with Saudi Arabia in particular facing a four-quarter growth slump, forcing it to slash investments in key economic projects. In July, Saudi Arabia maintained its output at 9 million bpd, largely in line with its OPEC+ quota. Algeria and Kuwait also stayed within their targets.

Iraq and the UAE, however, continued to exceed their production limits. Iraq increased its output by 30,000 bpd to 4.28 million bpd, Bloomberg's survey showed. Russia and Kazakhstan, along with Iraq, have pledged additional cuts to compensate for their chronic overproduction throughout the duration of the production cut agreement.

Venezuela and Iran, exempt from the current OPEC+ agreement, saw the largest declines in July. Venezuela's output dropped by 60,000 bpd to 830,000 bpd, and Iran's production fell by 50,000 bpd to 3.26 million bpd. Both countries rely heavily on sales to China, which is expected to reduce imports amid slowing economic growth.

Bloomberg's analysis is based on ship-tracking data, information from officials, and estimates from consultants, including FGE, Kpler Ltd., and Rapidan Energy Group.