OPEC+ has agreed in principle to raise oil output targets in June, according to two sources familiar with the group's discussions. However, the actual increase is expected to be largely symbolic due to the ongoing U.S.-Iran conflict and the closure of the Strait of Hormuz, which are significantly disrupting Gulf oil supplies.
The agreement involves seven OPEC+ nations – Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia, and Oman – planning a collective increase of approximately 188,000 barrels per day. This would mark the third consecutive monthly increase, despite the recent departure of the United Arab Emirates from the group. The decision comes as the war throttles exports from key producers like Saudi Arabia, Iraq, Kuwait, and the UAE, who previously held the sole capacity to increase production.
Iran, also a member of OPEC+, has experienced its own export cuts due to a U.S. blockade. The output hike will remain largely symbolic until shipping through the Strait of Hormuz reopens, and even then, normalization of flows is expected to take weeks or months, according to Gulf oil executives and global traders.
The disruption has driven oil prices to a four-year high, exceeding $125 per barrel, with analysts forecasting potential jet fuel shortages and increased global inflation. Crude oil output from all OPEC+ members averaged 35.06 million bpd in March, a decrease of 7.70 million bpd from February, with Iraq and Saudi Arabia making the largest cuts. Oil prices saw a decline on Friday following Iran's submission of an updated peace proposal, raising hopes for a potential resolution.
U.S. crude oil futures fell 3% to close at $101.94 per barrel, while Brent crude lost nearly 2% to settle at $108.17. The decision by OPEC+ signals a willingness to increase supply once the conflict subsides, sources indicated.
