OPEC+ is set to agree on Sunday (Jul 5) on another increase in output targets from August, sources with knowledge of the matter said, adding to global supply amid falling oil prices due to a gradual reopening of the Strait of Hormuz for oil exports.The oil producing group has agreed in principle to increase quotas by 188,000 barrels per day from August, on top of similar increases for June and July, one OPEC+ source said ahead of the group’s meeting later on Sunday.Two other sources said an increase of this amount was the most likely decision as a result of the online discussion.

Seven core members of OPEC+, which groups OPEC and allied producers including Russia, have increased their output quotas from April through July by almost 800,000 barrels per day.

PRODUCTION BEGINS TO RECOVER

Yet the increase has remained largely on paper because of the US-Israel war on Iran, which closed the Strait of Hormuz for passage of tankers from some of the most important OPEC+ members including Saudi Arabia, Kuwait and Iraq.OPEC+ output fell to 33.13 million bpd in May, according to OPEC data, from 42.77 million bpd in February. It began to recover in June thanks to US efforts to help the UAE and other OPEC+ nations to export more oil, but is still below pre-war levels.Despite persisting supply disruptions, oil prices have returned to pre-war levels, pressured by lower Chinese imports, higher exports from non-Middle East producers, and a record global strategic stock release coordinated by the International Energy Agency.The memorandum of understanding to end the war has also helped convince traders that supply would ultimately return to normal levels. Brent crude prices traded near US$72 per barrel on Friday, down from recent peaks of more than US$120 per barrel.