Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman—the seven OPEC+—members held a virtual meeting on July 5 to review market conditions, agreeing to raise their combined production target by a further 188,000 b/d for August

This marks a fifth consecutive monthly OPEC+ production increase approved since the Iran conflict erupted Feb. 28.

Under the country allocation, Saudi Arabia and Russia will each add 62,000 b/d, Iraq 26,000 b/d, Kuwait 16,000 b/d, Kazakhstan 10,000 b/d, Algeria 6,000 b/d, and Oman 5,000 b/d.

Saudi Arabia has shipped 34 million bbl through the Strait of Hormuz since June 17, when the US and Iran reached an agreement to end the war, according to Kpler data. Meantime, Iran has moved nearly 50 million bbl of crude to market following the lifting of the naval blockade.

Meanwhile, exports from major Mideast Gulf producers continue to climb. Saudi crude exports have recovered to about 90% of pre-war levels, while the UAE has restored output to more than 3.9 million b/d, matching or exceeding pre-war levels.

Iraq is also showing tentative signs of a shipping recovery. Daily crude flows through the strait had previously topped 10 million bbl. Overall, the supply picture remains one of building looseness.

Even so, normalization still faces periodic bottlenecks: Iran's control over routing and the underlying security conditions have yet to fully stabilize, vessels continue to turn back intermittently along the Omani route, and a full return to pre-war transit volumes is expected to take several more months.

However, the prospect of additional supply has once again sparked concerns about a potential global oil glut later this year. Referring to the conflict, Samantha Dart, co-head of global commodities research at Goldman Sachs Group Inc.,  said “[the firm] expect[s] that by the end of July this is done. Once we have a normalization of flows through the strait, the expectation is that we go into an oversupply.” Analysts warn that OPEC+ may soon face a dilemma: either curb production to support oil prices or compete for market share.

Hormuz traffic, others

In recent weeks, tanker traffic through the Strait of Hormuz has picked up, though oil shipments remain far from smooth.

According to vessel-tracking data compiled by Bloomberg, at least six oil and LNG tankers transited the Strait of Hormuz on Sunday, sailing out of the Persian Gulf along a route close to Oman’s coast.

Volatility in transit patterns persists. Iran's Islamic Revolutionary Guard Corps (IRGC) has repeatedly warned that any vessel failing to comply with, or deviating from, Iran's designated routes will face "an immediate and forceful response from the armed forces."

State funeral ceremonies for former Iranian Supreme Leader Ayatollah Khamenei began July 4 and are set to continue through July 9, with security tightened across Iran. Indirect talks between the US and Iran, held in Doha, have been paused for the funeral period after both sides described earlier discussions as having made "positive progress." Talks are expected to resume once ceremonies conclude, with unfreezing of Iranian assets and Hormuz transit tolls among the outstanding issues.

Separately, Qatar and Iran announced July 5 that maritime trade between their ports has resumed after a roughly 5-month suspension, with shipping between Iran's Dayyer port and Qatar's Al Ruwais port restarting following coordination between Iran's embassy in Doha and Qatari authorities—an early sign of broader Gulf trade normalization following the resumption in late June of Iranian goods clearing at UAE's Jebel Ali port, the region's largest. Qatar's transport ministry also lifted, effective the same day, a temporary suspension on maritime navigation for all vessel types.

Hormuz security and the question of transit tolls are expected to be discussed at this week's NATO summit.

France and the UK have separately offered to deploy a joint naval mission to support freedom of navigation in the strait, with Oman agreeing to coordinate on the arrangement. Iran, however, has objected, saying the strait "is not a stage for extra-regional powers to display military force."