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OPEC+ may approve an oil output increase on Sunday, four sources from the group said, a rise that will largely exist on paper as its key members are unable to raise production due to the U.S.-Israeli war with Iran.
The war has effectively shut the Strait of Hormuz — the world’s most important oil route — since the end of February and cut exports from OPEC+ members Saudi Arabia, the UAE, Kuwait and Iraq, the only countries in the group which were able to significantly raise production even before the conflict began.
Other group members, such as Russia, are unable to increase output due to Western sanctions and damage to infrastructure inflicted during the war with Ukraine.
Inside the Gulf, damage to infrastructure from missile and drone attacks has also been severe. Several Gulf officials have said it would take months to resume normal operations and meet production targets, even if the war stopped and the Strait of Hormuz reopened immediately.
At its last meeting on March 1, just as the war began to disrupt oil flows, OPEC+ agreed to a modest output boost of 206,000 barrels per day for April.
A month later, the largest oil supply disruption on record is estimated to have removed 12 to 15 million barrels per day, or up to 15% of global supply.
Crude prices have soared to a four-year high, settling at $120 a barrel. Oil prices could spike above $150 — an all-time high — if flows via Hormuz remain disrupted into mid-May, JPMorgan said on Thursday.
On Friday, U.S. West Texas Intermediate crude futures for May jumped 11%, or $11.42, to close at $111.54 per barrel. International benchmark Brent crude rose nearly 8%, or $7.87, to close at $109.03.
Sunday’s meeting will discuss OPEC+ quotas for May, sources said.
An increase will have little immediate impact on supply but would signal readiness to raise output once Hormuz reopens, OPEC+ sources have said. Consultancy Energy Aspects called the increase “academic” as long as disruptions in the strait persist.