A sub-group of eight members of the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) has agreed to further increase oil output in August by 548,000 barrels per day.
The alliance on Saturday made the decision, beating expectations that there would be another output increase of 411,000 barrels per day— the same target approved for May, June and July.
The group said in a statement that “a steady global economic outlook and current healthy market fundamentals, as reflected in the low oil inventories” led to the decision to further hike output.
The meeting comes after a 12-day conflict between Iran and Israel, which briefly sent prices above $80 a barrel amid concerns over a possible closing of the strategic Strait of Hormuz, a chokepoint for about one-fifth of the world’s oil supply.
The wider 22-nation OPEC+ group began output cuts in 2022 in a bid to prop up prices.
The eight alliance members, spearheaded by Saudi Arabia, surprised markets by announcing they would significantly raise production from May, sending oil prices plummeting.
Oil prices have been hovering around a low $65-$70 per barrel.
The latest hike sends a clear message that the group is firmly shifting toward a market share strategy.
It was also a response to Kazakhstan and Iraq, which are still overproducing their higher quotas.
By approving another output hike, heavyweight Saudi Arabia might seek to up pressure on members for not keeping to agreed quotas by slashing expected oil profits due to lower prices.