Riyadh-led OPEC+ raises quotas as region teeters on escalation

Saudi Arabia, Russia and five other OPEC+ members meeting online Sunday agreed to raise oil production quotas for September, even as war rages across the Middle East.

"The seven participating countries decided to implement a production adjustment of 188,000 barrels per day," a level similar to previous months, the Organization of the Petroleum Exporting Countries (OPEC) said in a statement, making no mention of a widely anticipated pause in the group's upward production cycle.

Saudi Arabia has led the group's strategy shift since 2025, gradually reversing the deep output cuts , nearly 6 million barrels per day at their peak between late 2022 and 2023, that Riyadh had spearheaded to prop up crude prices. With two of the three tranches of cuts now unwound, "our base case is a pause in the fourth quarter," said Rystad Energy analyst Jorge Leon.

In practice, Riyadh and its Gulf partners can no longer raise output to match their quotas: the war has hit Gulf production hard, forcing countries to throttle supply as Iran continues to disrupt traffic through the Strait of Hormuz. 

A brief rebound in shipping followed June's Iran-US memorandum, but hostilities resumed in July, dragging Hormuz traffic back down and raising risks in the Red Sea.

Saudi Arabia is also central to OPEC+'s next challenge: a review of "maximum sustainable capacity" levels for each member, which will underpin a broader overhaul of quotas starting next year, talks analysts at DNB Carnegie expect to be "potentially difficult." 

The UAE's exit from the group in May, driven by its own ambitions to expand production capacity, already exposed cracks in the alliance Riyadh has long worked to hold together.