Abu dhabi: OPEC+ is contemplating an increase in oil production on Sunday, according to four sources from the group. This potential increase is largely symbolic, as key members are unable to boost production due to the ongoing US-Israeli war with Iran.
According to TRTworld.com, the conflict has led to the closure of the Strait of Hormuz, the world's most crucial oil passage, since late February. This has significantly reduced exports from key OPEC+ members, including Saudi Arabia, the UAE, Kuwait, and Iraq, which were the only countries capable of significantly raising production before the conflict. Other members, such as Russia, face challenges in increasing output due to Western sanctions and infrastructure damage from the war with Ukraine.
Within the Gulf region, infrastructure damage from missile and drone attacks has been extensive. Gulf officials have indicated that even if the war ceased and the Strait of Hormuz reopened immediately, it would take several months to restore normal operations and meet production targets. At the last meeting on March 1, coinciding with the onset of the war's disruption to oil flows, OPEC+ agreed to a modest output boost of 206,000 barrels per day for April.
Since then, the largest oil supply disruption on record has removed an estimated 12 to 15 million barrels per day, equating to up to 15 percent of the global supply. Consequently, crude prices have surged to a four-year high near $120 a barrel. JPMorgan has warned that oil prices could exceed $150, an all-time high, if the disruptions via Hormuz continue into mid-May.
Sources indicate that Sunday's meeting will address OPEC+ quotas for May. While any increase in quotas will have minimal immediate impact on supply, it may signal a willingness to raise output once the Strait of Hormuz reopens. Consultancy Energy Aspects described the potential increase as "academic" as long as the strait remains closed.