OPEC+ Completes 2023 Cut Reversal With 188,000 bpd Hike While Iraq and Kazakhstan Owe Over 1 Million bpd in Compensatory Cuts

OPEC+ completed the final step in reversing its 2023 voluntary production cuts on August 2, approving a 188,000 barrel-per-day quota increase for September 2026. The seven-country group, which includes Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman, has now unwound the full 3.5 million barrels per day of cuts first imposed in April 2023. Analysts are watching the decision more for its market signal than for its direct supply impact.

A 188,000 bpd Hike Into a 7.5 Million bpd Compliance Hole

The quota increase is modest in absolute terms and nearly invisible against the group's existing compliance deficit. OPEC+ members are collectively producing approximately 7.51 million barrels per day below their own assigned quotas, according to data from the OPEC+ production strategy review. The September hike of 188,000 bpd represents roughly 2.5 percent of that compliance shortfall.

The gap exists because most OPEC+ members cannot physically reach the output levels their quotas allow, due to infrastructure constraints and years of underinvestment. Saudi Arabia, as swing producer, has absorbed much of the market-balancing burden. The OPEC+ Joint Ministerial Monitoring Committee will continue monthly reviews, with its next session scheduled for September 6, 2026.

Iraq and Kazakhstan Carry the Largest Overproduction Debts

Iraq submitted a compensatory cut plan committing to reduce output by a total of 614,000 barrels per day through June 2026, spread across monthly installments, per OPEC documentation. The schedule steps down from 140,000 bpd in January to 79,000 bpd in June. Iraq has been among the most persistent overproducers since the quota regime took effect in January 2024.

Kazakhstan faces a larger compensatory burden, with monthly cut obligations ranging from 503,000 bpd in January to 669,000 bpd in June 2026, per Argus Media data. Much of Kazakhstan's recent production decline has been driven by infrastructure disruptions and weather-related outages rather than voluntary compliance. The Tengizchevroil expansion at Tengiz was a source of output volatility throughout the compensation period.

EIA and OPEC Cannot Agree on Where Demand Goes Next

The two most closely watched energy forecasters are pointing in opposite directions on 2026 demand. The OPEC Secretariat's July Monthly Oil Market Report projects global oil demand growth of 970,000 barrels per day for 2026, already cut from an earlier estimate of 1.17 million barrels per day. The U.S. Energy Information Administration's Short-Term Energy Outlook, by contrast, projects global oil consumption to fall 1.2 million barrels per day in 2026, citing demand destruction linked to the Hormuz crisis.

The gap between the two forecasts is approximately 2.17 million barrels per day, larger than the individual output of most OPEC members. The EIA also projects Brent crude to fall from its Q2 2026 average of roughly $103 per barrel to $70 per barrel by the fourth quarter of 2026. Brent was trading at US$83.59 per barrel as of approximately 11:00 a.m. Mountain Time on August 7, per Oilprice.com, already down roughly 19 percent from the Q2 average.

The EIA's case rests on the return of shut-in production. The agency estimates 8.3 million barrels per day of global output was shut in during June 2026, primarily due to the Hormuz crisis. By year-end, the EIA projects shut-in volumes declining to 1.4 million barrels per day as the Strait reopens and supply returns. If that trajectory holds, global inventory builds could reach 2.7 million barrels per day in the fourth quarter.