OPEC+ Debates Oil Output Hike Amid Iran Conflict: What It Means for Global Oil Markets and Your Investments
MOSCOW/LONDON – OPEC+ is expected to approve an increase in oil production on Sunday, according to four sources within the group. However, this rise will primarily be symbolic, as key members are currently unable to boost output due to the ongoing conflict involving the US, Israel, and Iran.
The war has effectively closed the Strait of Hormuz—the world’s most critical oil shipping route—since late February. This closure has severely curtailed exports from OPEC+ members Saudi Arabia, the UAE, Kuwait, and Iraq, the only countries in the alliance previously able to significantly raise production before the conflict began.
Other members, including Russia, face constraints due to Western sanctions and damage to their infrastructure sustained during the conflict in Ukraine. Additionally, missile and drone attacks within the Gulf region have caused substantial infrastructure damage. Gulf officials have indicated that it could take several months to restore normal production levels, even if the conflict ends and the Strait of Hormuz reopens immediately.
At its March 1 meeting, coinciding with the onset of war-related disruptions, OPEC+ agreed to a modest output increase of 206,000 barrels per day for April. Since then, the largest disruption in oil supply on record has led to a reduction of 12 to 15 million barrels per day, accounting for up to 15% of global supply.
Crude oil prices have surged to a four-year peak, approaching $120 per barrel. JPMorgan warned on Thursday that prices could exceed $150 per barrel—the highest level ever recorded—if disruptions at the Strait of Hormuz continue through mid-May.
Sunday’s OPEC+ meeting will focus on production quotas for May. Although any approved increase will have minimal immediate impact on supply, it would signal the group’s willingness to boost output once the Strait of Hormuz reopens. Energy consultancy Energy Aspects described the proposed production increase as “academic” as long as the disruptions persist in the strait. — Reuters
Special Analysis by Omanet | Navigate Oman’s Market
The ongoing US-Israeli war with Iran and the closure of the Strait of Hormuz have created a severe supply disruption, pushing oil prices to near four-year highs. For businesses in Oman, this underscores both significant risks of supply chain instability and opportunities for the energy sector to capitalize on elevated prices once production normalizes. Smart investors should closely monitor geopolitical developments and infrastructure recovery timelines to strategically position in oil-related markets, as any reopening of the strait could trigger rapid market shifts.
