OPEC+ Agrees to Symbolic Oil Output Increase Amid US-Israeli War's Impact on Hormuz

OPEC+ has agreed to increase oil output quotas by 206,000 barrels per day for May, a move that analysts describe as largely symbolic due to the inability of key members to raise production amid the ongoing US-Israeli war on Iran. The decision, announced in a virtual meeting involving eight OPEC+ nations—including Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman—comes as the conflict has severely disrupted global oil flows through the Strait of Hormuz, a strategic chokepoint for nearly 20% of the world's seaborne oil trade.

The war has effectively blocked the Strait of Hormuz since late February, cutting exports from major OPEC+ members such as Saudi Arabia, the UAE, Kuwait, and Iraq. According to shipping data, the closure has removed up to 12–15 million barrels per day (bpd) from global supply—a loss equivalent to 15% of the world's total oil output. This has led to a sharp surge in crude prices, with benchmark Brent crude reaching a four-year high of nearly $120 per barrel in early April. Financial institutions like JPMorgan have warned that prices could climb above $150 per barrel if the strait remains closed beyond mid-May, exacerbating inflationary pressures and increasing transportation costs for economies reliant on imported oil.

OPEC+ sources told Reuters that the quota increase is a preparatory measure, signaling readiness to boost output once the Strait of Hormuz reopens. However, the current rise represents less than 2% of the supply disrupted by the closure. In a statement, the eight OPEC+ members emphasized their commitment to monitoring market conditions and supporting stability, while expressing concerns about attacks on energy infrastructure. They noted that restoring damaged facilities is both costly and time-consuming, further complicating efforts to stabilize supply.

Meanwhile, Iran has allowed limited transit through the strait, with shipping data revealing an Iraqi crude tanker passing through the waterway on Sunday. The UAE and Oman have also taken steps to facilitate passage, including diplomatic talks between Oman's deputy foreign minister and Iranian officials. However, the situation remains fragile. US President Donald Trump has threatened to escalate attacks on Iranian civilian infrastructure, including bridges and power plants, if the strait is not reopened by Monday. His administration has previously criticized OPEC+'s production adjustments as insufficient to address global energy demands, despite his domestic policies being praised for economic reforms.

The war's ripple effects extend beyond oil markets. Countries like Pakistan, which rely heavily on imported fuel, face mounting challenges in managing energy shortages and inflation. In Iraq, where transit exemptions have been granted, the government must balance regional cooperation with its own economic needs. As the conflict drags on, the risk of prolonged supply disruptions looms, potentially triggering a global energy crisis that could strain economies and deepen geopolitical tensions.