The world’s largest alliance of oil-producing countries, OPEC+, has agreed to increase oil production by another 188,000 barrels per day from next month after the Iran war disrupted about one-fifth of global oil supply for several months.
The increase in supply could help reduce fuel prices for consumers, as higher oil production often leads to lower petrol prices.
In a statement issued on Sunday after its regular meeting, OPEC+ said seven of its 12 member countries, Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman — agreed to the voluntary production increase.
The alliance said the decision was made “in their collective commitment to support oil market stability.”
The Iran war disrupted global energy markets, limiting supplies of oil, liquefied natural gas, fertiliser, helium and other resources. The shortages raised concerns about higher inflation in many countries.
During the conflict, rising oil prices pushed petrol prices close to record highs in the spring.
Although OPEC+ has increased production quotas by almost 800,000 barrels per day between April and July, actual production has not yet returned to earlier levels.
According to OPEC data, the group’s oil output dropped to 33.13 million barrels per day in May from 42.77 million barrels per day in February.
Production began recovering in June after the United States helped the United Arab Emirates and other OPEC+ countries export more oil, but output remains below pre-war levels.
Oil prices have continued to fall since tensions in the Middle East eased and after the United States and Iran signed a peace agreement last month.
The Strait of Hormuz, a key shipping route in the Persian Gulf, normally handles about 20 per cent of the world’s oil and other supplies each day. During the Iran war, most container traffic through the strait slowed to a near standstill for several months.
Since the peace agreement was signed, shipping has resumed through the strait. However, it may take time before oil and gas prices fully stabilise after months of conflict.
As of publication, the U.S. benchmark oil price, West Texas Intermediate, was below $69 per barrel. That is down from more than $90 less than a month earlier and below its recent peak of about $113 in April.
Canada’s national average price for regular petrol stood at about $1.61 per litre, according to CAA. That is more than 10 cents lower than a month ago, although still above the $1.35 recorded a year earlier. It is also well below this year’s high of $1.90 per litre reached in May.
