OPEC+ agrees to boost oil output even as US war on Iran disrupts shipments
OPEC+ agreed on a modest oil output boost of 206,000 barrels per day for April on Sunday just as the US-Israeli war on Iran and Tehran’s retaliation disrupted oil flows from key members of the producer group in the Middle East.OPEC+ has a history of raising oil output to cushion disruptions but analysts said the group currently has little spare capacity to add to supply, except for its leader Saudi Arabia and the United Arab Emirates, which will also struggle to export oil until navigation in the Gulf returns to normal.Riyadh has been increasing oil production and exports in recent weeks by around 500,000 bpd in preparation for US strikes on OPEC+ member Iran, sources have told Reuters.Oil, gas and other shipments from the Middle East via the Strait of Hormuz have come to a halt since Saturday after shipowners received a warning from Iran saying the area was closed for navigation.Hundreds of ships dropped anchor and were not moving on Sunday and several ships came under attack.Hormuz is the world’s most important oil route accounting for over 20% of global oil transit.Despite fears of a glut that would weigh on prices, global benchmark Brent crude has rallied this year and jumped on Friday to $73 per barrel, the highest level since July, on fears of a wider conflict in the Middle East.Brent traded 8%-10% up around $80 per barrel over the counter on Sunday, traders said.OPEC+’s output increase is unlikely to calm markets, said Jorge Leon, a former OPEC official who now works as head of geopolitical analysis at Rystad Energy.OPEC+ will raise production by 206,000 barrels per day beginning in April, it said in a statement on Sunday.
It had debated options ranging from 137,000 bpd to 548,000 bpd, according to five sources who declined to be named because they are not authorized to speak to the press.“Prices will respond to developments in the Gulf and the status of shipping flows, not to a relatively small increase in output.”The agreed increas...