OPEC+ members plan to raise their production quotas for May, a symbolic move as the Middle East conflict constrains output and shipments from several of the alliance’s largest members.
Key producers led by Saudi Arabia and Russia have an agreement in principle to increase targets by about 206,000 barrels a day during a video conference later on Sunday, according to two delegates who asked not to be identified discussing private deliberations.
With oil flows from the Persian Gulf throttled by the Iran war and top producers like Saudi Arabia, the United Arab Emirates, Iraq and Kuwait forced to curtail supplies, such a move by the group would be theoretical. Still, it could symbolize their intention to revive output as soon as hostilities ease.
Oil prices have been roiled by five weeks of conflict, climbing to almost $120 a barrel last month, and soaring costs for products such as jet fuel and diesel are threatening a renewed wave of inflation. Brent futures settled near $109 on Friday after US President Donald Trump vowed an escalation in the war, which could prolong disruptions to energy flows through the vital Strait of Hormuz.
Before the conflict erupted, eight major nations from the Organization of the Petroleum Exporting Countries and its partners had been gradually restoring supply halted back in 2023. They held production steady for the first three months of this year, then on March 1 — a day after the initial US and Israeli strikes on Iran — they agreed to a small increase of 206,000 barrels a day for April.
Ship Traffic
Hormuz has now been effectively closed for more than a month, creating what the International Energy Agency has called the biggest supply disruption in the history of the oil market. Traffic through the narrow waterway, the route for about a fifth of the world’s oil in normal times, has slowed to a trickle, though there have been tentative signs of a slight pickup in recent days.
On Friday, the seven-day rolling average for transits reached the highest since the war began, according to vessel-tracking data compiled by Bloomberg. Two supertankers carrying Saudi and Emirati crude appeared to exit the Gulf last week.
Read More: Three Ships Appear to Exit Hormuz by New Oman Coast Route
The Iranian military said Saturday that its neighbor, “brotherly Iraq,” is exempt from any restrictions on crossing the waterway. While the concession could unblock as much as 3 million barrels a day of Iraqi shipments, one official in Baghdad cautioned that its usefulness will depend on whether shipping companies are willing to risk entering the strait.
Producers around the Gulf such as the Saudis, the UAE and Iraq have cut oil production by about 10 million barrels a day, equivalent to roughly 10% of global supplies, the IEA said in mid-March. Even if the fighting stops, it could take time to bring tankers to ports and bolster output again, and it’s unclear what Iran’s future influence over Hormuz traffic might be.
Read More: Gulf Energy Industry Will Take Years to Recover From Iran War
The nation is currently exerting considerable control over shipping through the chokepoint, setting up a tolling system and giving preferential treatment to vessels from countries it deems friendly.
Russian Output
While Gulf producers are being affected by the Middle East conflict, the global oil market also faces supply disruptions in Russia. The OPEC+ member has seen its energy infrastructure targeted by Ukrainian attacks, and its Primorsk and Ust-Luga export terminals on the Baltic Sea have been crippled.
Read More: Russian Oil Exports Plunge as Drone Strikes Cripple Baltic Ports
If the 206,000-barrel increment for April is ratified, OPEC+ will have formally restored roughly half of a second tranche of production shuttered since 2023, leaving members with another 827,000 a day of these layers left to restart.
The wider 22-nation OPEC+ coalition has, at least on paper, another set of output curbs dating back to 2022. An advisory body that assesses oil markets on behalf of the group, the Joint Ministerial Monitoring Committee, will also meet online on Sunday.
This report is auto-generated from Bloomberg news service. ThePrint holds no responsibility for its content.