OPEC+ ministers decided on Sunday to increase oil quotas by a total of 188,000 barrels per day for July. Analysts suggest this move is unlikely to significantly impact oil prices, which have been driven higher by the ongoing conflict in the Middle East.

Jorge Leon, an analyst at Rystad Energy, commented that the increase means very little while the Strait of Hormuz remains closed. He noted that the market is short of physical barrels, not quota announcements, implying the 188,000 barrels per day increase is more of a policy signal than a substantial supply boost.

The hiked production output was agreed upon during a video meeting of oil ministers from key OPEC+ countries, including Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman, according to a statement from the organization.

This increase follows similar decisions made in previous months. The OPEC+ statement indicated that the latest hike was intended to support oil market stability. The seven countries also see an opportunity to accelerate their compensation in a period of historically high oil prices.

The ministers reaffirmed the importance of adopting a cautious approach and maintaining full flexibility to increase, pause, or reverse voluntary production adjustments. This includes the possibility of reversing previously implemented voluntary adjustments announced in November 2023.

Leon of Rystad Energy highlighted that OPEC+ is being wary of potential shifts in the Middle East conflict, particularly concerning the Strait of Hormuz. He warned that if the Strait reopens, the market could rapidly shift from a fear of shortage to a fear of surplus.

“Returning OPEC+ supply, a stronger US shale response and weaker demand after a period of very high prices could leave the market with a very large oversupply problem,” he added.