OPEC+ agrees to increase oil production

Moscow. OPEC+ agreed to increase its oil production quotas by 206,000 barrels a day by May, a modest increase that will largely remain on paper as its key members cannot raise production due to the United States and Israel’s war against Iran.

The conflict has closed in fact the Strait of Hormuz, the world’s most important oil route, since late February and has reduced exports from OPEC+ members Saudi Arabia, the United Arab Emirates, Kuwait and Iraq, the only countries in the group that could significantly increase production even before the attacks began.

The increase in the OPEC+ quota of 206 thousand barrels per day represents less than 2 percent of the supply interrupted by the closure of Hormuz, but indicates the willingness to increase production once the sea route is reopened, according to sources from the organization. Consulting firm Energy Aspects described the increase as theoretical as long as disruptions in the strait persist.

“It actually adds very few barrels to the market. When the Strait of Hormuz is closed, the additional barrels from OPEC+ lose much of their relevance,” said Jorge León, a former OPEC official who is now head of geopolitical analysis at Rystad Energy.

In addition to the disruptions affecting Persian countries, others like Russia cannot increase production; in the case of Moscow, due to Western sanctions and damage to infrastructure during the war with Ukraine.

Within the Gulf, damage to infrastructure caused by missile and drone attacks has also been severe. Several officials in the region have said it would take months to resume normal operations and meet production targets, even if the war ended and the Strait of Hormuz was immediately reopened.

An independent OPEC+ working group, which also met on Sunday, called the Joint Ministerial Monitoring Committee, expressed concern about attacks on energy assets, noting that their repair is expensive and time-consuming, which has an impact on supply, OPEC+ reported in a statement.

The OPEC+ increase in May is the same as the eight members had agreed for April at their last meeting on March 1, just when the war began to interrupt oil flows.

A month later, the largest oil supply disruption in history is estimated to have resulted in a reduction of between 12 and 15 million barrels a day, representing up to 15 percent of global supply.