Published On 7/6/2026
In its first meeting after the signing of the US-Iranian memorandum of understanding, the OPEC Plus alliance led by Saudi Arabia and Russia decided yesterday, Sunday, a new increase in oil production by 188 thousand barrels per day, starting from the beginning of next August, in an effort to calm the markets that analysts say need more than this decision.
The decision represents a first step to test the understandings between Tehran and Washington and restart the Gulf taps after the supply crisis resulting from the closure of the Strait of Hormuz. The coalition stressed in a statement the adoption of a flexible approach that allows the increases to be modified or suspended voluntarily according to geopolitical developments.
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The new decision pushed oil prices to decline by about 1.5% on Monday, as Brent crude oil reached $102 a barrel, according to Reuters, which said that the decision may contribute to increasing global supplies. This is the second increase approved by OPEC Plus, after a similar increase that took place at the beginning of last June, after it was approved in May.
Double message
Experts say that market stability is not only linked to increasing production, but also to the alliance’s ability to secure transportation routes and deliver oil to consumers in Asia, Europe, and Africa.
Despite the transit of more than 10 million barrels of oil daily since the signing of the US-Iranian memorandum on June 17, according to what Issa Tibi said in a report for Al Jazeera, analysts see in the OPEC Plus decision a double message.
Depending on the geopolitical situation, the continued increase means that the alliance is highly dependent on the conflict between the United States and Iran, says Thomas Ebner, chief analyst at Business Monitor.
This hedging may be explained by the large numbers related to the decline in supplies, as exports from Saudi Arabia, Kuwait, and Iraq lost about 6 million barrels per day during the war, which prompted OPEC Plus to adhere to what it calls complete flexibility to control production increases.
Hope at the end of the tunnel
However, other experts believe that the decision represents the beginning of a broader recovery from the repercussions of the conflict, which affected the entire world due to the volatility of oil prices, and the accompanying enormous pressures on the economy – in the opinion of Klaus Friesenbichler, professor of economics at the Austrian Institute for Economic Research.
The focus is not on the increase alone, but primarily on transporting oil from the region and delivering it to consumers in Asia, Europe and East Africa, according to Friesenbichler, who believes that there is a glimmer of hope at the end of the tunnel.
The coalition – it seems – is trying to reassure the markets that have not yet recovered from the Hormuz crisis, in the midst of fragile understandings between America and Iran, which raises questions about whether the new increase will calm the market or increase the dose of doubt.
Future expectations
On April 28, the UAE, one of the world’s largest oil producers, announced its withdrawal from the Organization of the Petroleum Exporting Countries (OPEC) and from the “OPEC Plus” group, in a move that experts said may be the beginning of a “free float” for one of the most active producers, which may threaten the cohesion of the alliance and push oil prices toward a decline.
The UAE decision came after nearly 60 years of membership in OPEC, in addition to withdrawing from the OPEC Plus alliance, which was established in 2016, at a sensitive geopolitical and economic moment, as the market does not face the risk of an oversupply, as much as it faces supply disruptions against the backdrop of tensions surrounding the Strait of Hormuz.
After the withdrawal, the UAE said that it “will continue its responsible role by increasing production gradually and thoughtfully, in line with demand and market conditions,” and “will continue to work with partners to develop resources, in a way that supports growth and economic diversification.”
In general, energy experts expect oil prices to decline with an increase in supply if the US-Iran agreement goes ahead, especially if the United States reduces Iran’s oil exports.
In previous statements to Al Jazeera Net, energy affairs expert Amer Al-Shobaki said that the nature of the opening of the Strait of Hormuz will be decisive in determining the speed of falling prices, pointing out that there is a difference between a gradual opening “at Iranian request,” which means Tehran will remain a major influence on traffic, and an opening linked to the development of the security situation and the removal of mines through international efforts in which several Western parties participate.
In Al-Shoubaki’s opinion, the risk premium in the oil sector will not disappear with a mere political announcement, because shipping and insurance companies believe that passage is still conditional, or that security risks exist, which means that part of the premium will remain in the price of crude, even if prices decline in the first sessions after the announcement of the agreement.
As for the American corporation Morgan Stanley, last April, it expected 3 paths for oil prices based on the speed of the resumption of the Hormuz movement, which were as follows:
- In the calming scenario, which includes the return of shipping within a month, the price of a barrel of oil stabilizes between 80 and 90 dollars.
- However, if about 80% of tanker traffic returns within a month, and the return of the Strait to normal is delayed by 3 months, and Iran maintains influence over the movement, prices may hover around $100 to $110 per barrel.
- In the most severe scenario, meaning that the actual closure continues for several months, prices may jump to $150-180.
After the announcement of the agreement, crude prices fell to levels not seen since the start of the war, as the price of oil reached about $80 per barrel during transactions last June, but they rose again with the return of the closure of the Strait and the subsequent exchange of strikes between Washington and Tehran.
Oil expert Mamdouh Salama said in a previous statement to Al Jazeera Net that the repeated closure of the Strait of Hormuz, and its irregular opening, creates a state of turmoil in the oil markets, stressing that “the repeated closure by Tehran of the Strait of Hormuz creates a situation that leads to a permanent increase in the price as a result of what is known as the traffic premium in the Strait of Hormuz.”
