OPEC+ crude output in May 2026 was approximately 33.1 mb/d, down 185-190 kb/d month-over-month, with Iran accounting for the largest decline due to the US naval blockade. The eight core OPEC+ members have extended voluntary extra cuts through September 2026, with a flexible unwinding schedule dependent on market conditions.
The full reopening of the Strait of Hormuz will restore Iranian export capacity of roughly 1.5-2.0 mb/d. Kuwait, Iraq, and UAE output will also normalize as tanker movements resume. The combined effect could add 2.5-3.5 mb/d to global supply within 60-90 days, assuming no infrastructure damage.
US domestic crude production remains at record levels, with the EIA projecting continued growth through 2027. However, associated natural gas production is also rising, which has implications for NGL output and the broader energy complex. US oil-directed drilling rigs have been gradually declining as operators focus on cash flow.
The IEA expects global oil demand growth to slow to 0.6 mb/d in 2026, down from an earlier estimate of 1.2 mb/d, reflecting the economic impact of the Middle East conflict and trade disruptions. This slower demand growth, combined with returning OPEC+ supply, points to a potentially well-supplied market in H2 2026.
The return of Iranian supply is the most significant bearish structural shift for oil markets since the pandemic. Monitor the pace of production ramp-up and OPEC+ response. If the 3.24 mb/d of cuts are unwound alongside Iranian supply returning, Brent could test $75/bbl. Consider extending hedging coverage into 2027.