OPEC+ Added Barrels for a Fifth Straight Month Into a War It Cannot Control

The seven-country OPEC+ subgroup agreed another 188,000 barrels a day for August at a virtual meeting on the 5th of July. That is the fifth consecutive monthly increase and takes the cumulative addition since April to roughly 940,000 barrels a day. Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman are the seven. The July group quota stood at 35.83 million barrels a day.

What is being unwound is the 1.65 million barrels a day of voluntary cuts agreed back in April 2023. Saudi Arabia's own July quota went to 10.35 million barrels a day and Russia's to 9.82. Framed generously this restores output lost during the Hormuz blockade. Framed accurately it is also a fight for market share in Asia against Russian ESPO and Iranian barrels arriving after the blockade.

The timing sits oddly against everything else happening in the region. Brent closed at 100.69 on the 23rd of July and is back near 89 after this week's US strikes on dozens of Revolutionary Guard targets. Tanker transits through Hormuz are down about 90 percent year on year. Aramco has a 400,000 barrel a day refinery at Jizan shut since the 27th after a Houthi strike. Adding quota into that is a statement about competition, not about supply comfort.

Riyadh is under real fiscal pressure. The first quarter deficit came in at 33.5 billion dollars, which used 76 percent of the full-year target inside ninety days. Aramco's first quarter free cash flow covered only 0.85 times its dividend. The company then cut its Asian official selling price to minus 1.50 dollars against Oman and Dubai for August, the first negative print since 2020, sacrificing revenue to hold volume.

That combination is the uncomfortable part. Selling more barrels at worse prices to defend share, while the state budget depends on the price rather than the share, is a strategy with a short runway. It works if the war premium keeps the headline number elevated. It stops working the moment Hormuz reopens properly and the barrels that have been queuing arrive at once.

So OPEC+ is now a producer group managing an internal competition rather than a global price. The cartel logic always assumed members would rather have the price than the volume. Five straight hikes into a supply shock says several of them have quietly decided otherwise, and that is a more important change than any single monthly number. The next meeting will tell you whether it was a phase or a policy.