Opec+ agrees to modest oil output boost as war disrupts shipments

Opec+ agreed 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.

Riyadh has been increasing oil production and exports in recent weeks 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 ship-owners received a warning from Iran saying the area was closed for navigation. Hundreds of ships dropped anchor and were not moving on Sunday. 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.

“This move is unlikely to calm markets,” said Jorge Leon, a former Opec official who now works as head of geopolitical analysis at Rystad Energy.

“Prices will respond to developments in the Gulf and the status of shipping flows, not to a relatively small increase in output.” Opec+ will raise production by 206,000 barrels per day from 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 authorised to speak to the press.

The agreed ​increase, which brings ‌an end to a three-month pause in production hikes, represents less than 0.2% of global supply.

“A tighter market in the first quarter ‌allows the group to continue increasing the quota, however real barrels being added to the market will be a fraction of it,” said Giovanni Staunovo, an oil analyst at UBS.

Opec+’s declining level of spare capacity might have been a factor behind the decision not to opt for a larger boost, he said.

 Middle ‌East leaders have warned Washington that a war on Iran could lead to oil prices jumping to over $100 per barrel, said veteran Opec analyst Helima Croft from RBC. Analysts from Barclays ‌also said prices could rise to $100.

Croft said the market impact from any Opec output increase will be limited due to a lack of production capabilities outside Saudi Arabia.

The meeting on Sunday involved only eight members of Opec+ - Saudi Arabia, Russia, the UAE, Kazakhstan, Kuwait, Iraq, Algeria and Oman. Opec+ groups the organisation of the Petroleum Exporting Countries and allies like Russia ​but most production changes in the past years have been done by the eight members.

The eight members raised production quotas by about 2.9 million bpd from April through December 2025, roughly 3% of global demand, before pausing increases for January to March 2026 due to seasonal weakness.

Brent crude jumped 10% to about $80 a barrel over the counter ‌on Sunday, oil traders ‌said, while analysts predicted that prices could climb as high as $100 after US and Israeli strikes on Iran plunged the Middle East into a new war.

“While the ‌military attacks are themselves supportive for oil prices, the key factor here is the closing of the Strait of Hormuz,” said Ajay Parmar, director of energy and refining at ICIS.

Most tanker owners, oil majors and trading houses have suspended crude oil, fuel and liquefied natural gas shipments via the Strait of Hormuz, trade sources said, after Tehran warned ships against moving through the waterway. More ​than 20% of global oil is moved through the Strait of ‌Hormuz.

“We expect prices to open (after the weekend) much closer to $100 a barrel and perhaps exceed that level if we see a prolonged outage of the Strait,” Parmar said.

Middle East leaders have warned Washington that a war on Iran could lead to oil prices jumping to more than $100 a barrel, said RBC analyst Helima ​Croft. Barclays ‌analysts also said prices could hit $100.

The Opec+ group of oil producers agreed ‌on Sunday to raise output by 206,000 barrels per day (bpd) from April, a modest increase representing less than 0.2% of global demand.

While some alternate infrastructure could be used ‌to bypass the ‌Strait of Hormuz, the net impact from its closure would be a loss of 8 million ‌to 10 million bpd of crude oil supply even after diverting some flows through Saudi Arabia’s East-West pipeline and Abu Dhabi pipeline, said Rystad energy economist Jorge Leon.

Rystad expects prices to rise by $20 ​to about $92 a barrel when trade opens. The Iran crisis also prompted Asian governments and refiners to assess oil stockpiles and alternative shipping routes and supplies.

Reuters