OPEC+ members led by Saudi Arabia agreed over the weekend to raise production quotas by 188,000 barrels per day for next month, continuing a progressive unwinding of the long-standing output curbs that the group maintained through the Iran conflict. The decision reinforces a firmly bearish supply outlook that has kept crude near its lowest levels since late February, even as a fresh security scare in the Strait of Hormuz briefly lifted prices this week.
The quota increase is only part of the story. In a striking signal of softening conditions, Saudi Aramco cut the official selling price of its flagship Arab Light crude for Asian buyers next month by $11 a barrel, widening the differential to a $1.50 discount against the regional benchmark. The last two times the company offered the grade at a discount were during the oil price wars of 2020 and 2015 — an indication that the kingdom is now prioritizing volume and market share as returning Gulf barrels compete for buyers.
Major Persian Gulf producers are rapidly accelerating output. Saudi exports are approaching pre-war levels, and the United Arab Emirates, which formally left OPEC during the conflict, has fully restored its shipping flows. The combination of higher quotas and aggressive pricing points to an ample global supply that stands in sharp contrast to the scarcity fears that pushed Brent above $120 at the height of the war.
The group is not without internal strain. Iraq, OPEC's second-largest producer, has reportedly sought a higher production quota and signaled to the group that it could leave if its demands are not met — raising the prospect of a second departure after the UAE's exit in May. Members are racing to recoup revenue lost during the war, and the competition for market share is testing the cohesion that has historically underpinned the group's ability to steer prices.
For now, the added barrels are doing their work. Even after Iran attacked a Qatari LNG tanker near the Strait of Hormuz and the United States revoked Iran's oil-sale license this week — sending Brent up 3% to settle at $74.16 and popping it to $76 after hours — crude quickly gravitated back toward its recent lows. The market has judged that the wave of returning supply outweighs the security premium, at least until the next flare-up.
The balance is delicate. A sustained escalation in the Hormuz standoff could overwhelm the bearish supply signal and drive a sharper rally, while a return to calm would likely see prices drift back toward four-month lows. With OPEC+ committed to adding barrels and Saudi Arabia signaling a fight for market share, the supply side of that equation is unlikely to reverse soon.
Continuing coverage: Oil Prices dashboard · Saudi Arabia · OPEC Members · Geopolitics.