OPEC+ Oil Output Hike Faces Strait of Hormuz Closure And War Related Supply Limits

OPEC+ is expected to approve a small OPEC+ oil output hike on Sunday, but analysts say the change will not add real barrels to markets while the U.S.-Iran war keeps blocking key Gulf export routes and interrupts supplies from several major producers.

Seven core OPEC+ members have, according to sources, backed a plan to lift group production targets by about 188,000 barrels per day in June. This would mark a third straight monthly OPEC+ oil output hike, signalling readiness to restore flows once the conflict eases.

OPEC+ oil output hike overshadowed by Hormuz closure and war impact

The war involving Iran, which started on February 28, has led to the closure of the Strait of Hormuz, restricting shipments from Saudi Arabia, Iraq and Kuwait, as well as from the United Arab Emirates. Before the fighting, these countries were the only OPEC+ members with spare capacity to raise output.

Gulf oil executives and international traders say the planned OPEC+ oil output hike is largely symbolic while Hormuz remains shut. Even after ships resume normal passage, they expect it could take several weeks, or even months, before export volumes return to levels seen before February 28.

Membership shifts and data behind the OPEC+ oil output hike

The seven states involved in Sunday’s OPEC+ oil output hike discussion are Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia and Oman. Following the United Arab Emirates’ exit from the alliance this week, OPEC+ now counts 21 members including Iran, but recent monthly production decisions have only involved the seven plus the UAE.

OPEC reported that combined crude production from all OPEC+ countries averaged 35.06 million barrels per day in March, a fall of 7.70 million barrels per day from February. Iraq and Saudi Arabia delivered the largest reductions because export routes were constrained after the conflict began and Hormuz was shut.

The disruption has lifted oil prices to a four-year peak above $125 per barrel this week, with some analysts warning of widespread jet fuel shortages within one to two months and a possible surge in global inflation if the war drags on, despite the planned OPEC+ oil output hike remaining in place on paper.

While OPEC+ prepares another formal OPEC+ oil output hike and manages internal changes after the United Arab Emirates’ departure, real supply remains tied to security around Hormuz and the U.S.-Iran war, which together continue to shape prices, export volumes and expectations for inflation worldwide.