OPEC+ set to 'agree on third oil output quota hike' since Hormuz closure

OPEC+ is set to ‌agree on Sunday to a modest oil ‌output hike, sources said, but the increase will remain largely on paper as long as the US-Iran war continues to disrupt Gulf oil supplies. Seven OPEC+ countries have agreed to ‌raise oil output targets by about 188,000 barrels per day in June, the third consecutive monthly ⁠increase, the sources said and a draft OPEC+ statement showed. The move is designed to show the group is ready to raise supplies once the war stops. It is also pressing on with plans to raise output targets despite the departure of the United Arab Emirates from the group this week, sources said.

The seven members meeting on Sunday ​are Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia, and Oman. With the UAE leaving, ‌OPEC+ includes 21 members including Iran, but in recent years only the seven nations plus the UAE have been involved in monthly production decisions. The Iran war, which began on February ⁠28, and the resulting closure of Hormuz have throttled exports from OPEC+ members Saudi Arabia, Iraq and Kuwait. Before the conflict, these producers were the only ​countries in ‌the group able to raise production.

The output hike will remain largely symbolic until ‌shipping through the Strait of Hormuz reopens and even then it will take several weeks if not months for flows to normalise, oil executives from the Gulf and global oil traders have said.

The ‌disruption propelled oil ‌prices to a four-year high above $125 per ⁠barrel as analysts begin to predict widespread jet fuel shortages in one ‌to two months and a spike in global inflation.

Crude oil output from all OPEC+ members averaged 35.06 million bpd in March, down 7.70 million bpd ⁠from February, OPEC said in a report last month, with Iraq and ​Saudi Arabia making the biggest cuts due to constrained exports.

OPEC+ seven members will meet again on June 7, the draft statement said.

Reuters