The global oil market is absorbing a sharp supply restoration following the ceasefire agreement in the U.S.-Israel war on Iran. OPEC+ announced on Sunday that it will raise its collective crude output by 188,000 barrels per day starting in August. The decision marks the cartel’s fifth consecutive monthly production increase. The core seven members, including Saudi Arabia and Russia, are continuing to systematically unwind a series of voluntary supply cuts originally implemented in 2023.
This supply injection arrives as the commodity faces severe downward pressure. Global oil prices have plunged roughly 20% to 22% over the past month, returning to near pre-war levels. Brent crude recently settled at $72.12 a barrel, while West Texas Intermediate crude fell to $68.69, according to Morningstar.
The Hormuz Reopening and Supply Normalization
The primary macroeconomic driver behind the falling prices and stabilizing supply is the lifting of the U.S. naval blockade on Iranian ports. The gradual reopening of the critical Strait of Hormuz to shipping traffic has alleviated the unprecedented supply shock that defined the early months of the year. To offset the initial wartime disruptions, the International Energy Agency coordinated a record-breaking global strategic stock release.
The scale of the disruption was severe before the ceasefire took effect. OPEC data indicates the cartel’s total output dropped from 42.77 million bpd in February 2026 down to 33.13 million bpd during the May blockade. Now, reopened transit routes, supplemented by lower Chinese import demand and increased exports from non-Middle East producers, are pushing prices down.
Internally, the group’s output decisions are occurring amidst structural fracturing. The United Arab Emirates formally exited OPEC on May 1, citing a mismatch between its 4.85 million bpd capacity and its allocated quotas. Iraq continues to press the cartel for higher individual limits.
What the Restored Transit Routes Mean for Crude Forecasts
The normalization of shipping traffic through the Middle East has fundamentally altered second-half revenue projections for major oil producers. Financial institutions are actively revising their models in response to the physical crude market weakening. Citi analysts forecast that Brent crude could drop to $60 per barrel by year-end as the new 188,000 bpd supply hits the market in August.