Opec+ has agreed to increase output by 206,000 barrels per day from April, following one of the alliance’s most consequential meetings in years, held against the backdrop of US and Israeli strikes on Iran and rising threats to Gulf oil flows.
The figure falls between the 137,000 bpd base case most analysts had anticipated and the more aggressive increases of 400,000 to 500,000 bpd that had been suggested.
“The eight participating countries decided to resume the unwinding of the 1.65 million bpd of additional voluntary adjustments announced in April 2023 and agreed on a production adjustment of 206,000 bpd,” Opec said.
The meeting followed US and Israeli strikes on Iran launched on Saturday, and Tehran’s retaliatory missile and drone salvos against Gulf states overnight. The exchange has disrupted tanker traffic in the Strait of Hormuz, through which about a third of the world’s seaborne oil flows.
Reports suggest the latest barrage also struck Iraq’s oil sector, with a potential impact on its southern export terminals, through which Baghdad sells most of its crude. Gulf production centres have so far been spared Iran’s targeted attacks.
About 15 million bpd of crude and 5.5 million bpd of refined products were flowing through the Strait of Hormuz as recently as January and last month, according to S&P Global Commodities at Sea data. Vessels have been piling up on both sides of the strait's entrance since Saturday night.
Opec+ holds about 3.5 million bpd in spare capacity, which is the volume of production that can be brought online in 30 days and sustained for 90. It is largely concentrated in Saudi Arabia and the UAE, which are best positioned to compensate for any prolonged loss of Iranian or Iraqi barrels.
