Quick overview

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OPEC+ cautioned that damage to Middle Eastern energy assets will have a lasting effect on oil supply even after the Iran war ends, as it approved a symbolic increase in output quotas for next month.

The group’s ministerial monitoring committee stated in a statement following its Sunday meeting that “restoring damaged energy assets to full capacity is both costly and takes a long time.”

 

It stated that any action that compromises supply security—such as an assault on infrastructure or a disruption of export routes—increases market volatility and undermines OPEC+’s efforts. During a video conference, major producers, including Saudi Arabia and Russia, decided to raise their May targets by roughly 206,000 barrels per day.

Such a move by the group is theoretical, since the war has reduced Persian Gulf oil exports and major regional producers have been forced to reduce supplies.

Five weeks of fighting have caused oil prices to spike, reaching nearly $120 per barrel last month as Iran successfully closed the vital Strait of Hormuz and attacked important Gulf energy assets, causing what the International Energy Agency called the largest supply disruption in the market’s history.

Eight major countries from the Organization of the Petroleum Exporting Countries and its allies had been progressively resuming supply, which had been halted back in 2023, before the conflict.

They agreed to a 206,000-barrel-per-day increase for April on March 1, the day after the initial US and Israeli strikes on Iran, after maintaining production levels for the first three months of this year.

Russian Deputy Prime Minister Alexander Novak stated, “We will monitor the situation and take all necessary measures to balance the market.”

There is an obvious imbalance in the market. Global demand is greatly impacted by this, not just in the energy markets but also in the economy and final supply. The IEA reported in mid-March that producers in the Persian Gulf region had reduced oil production by roughly 10 million barrels per day, or about 10% of global supplies. Saudi Arabia has rerouted some shipments because Hormuz is mainly off-limits.