Synopsis
Eight OPEC+ countries will increase their crude oil production by 206,000 barrels per day in April. The move follows major attacks in the Gulf region. The Strait of Hormuz, a critical oil chokepoint, faces potential disruption. Experts predict a rise in oil and gasoline prices. The move aims to stabilize markets amid growing geopolitical tensions.
ETMarkets.comEight OPEC+ countries will increase crude production by 206,000 barrels per day in April following major attacks on Iran and retaliation.Eight countries part of the OPEC+ oil cartel announced Sunday they would increase crude production as U.S. and Israeli forces launched a major attack on Iran and the country responded with retaliatory strikes against Israel and U.S. military installations around the Gulf, disrupting oil shipments from the region.
The Organization of the Petroleum Exporting Countries, at a Sunday meeting scheduled before the start of the war, said it would increase production by 206,000 barrels per day in April, more than analysts expected. Countries that have increased production include Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman.
Attacks across the region, including on two ships passing through the Strait of Hormuz, the narrow mouth of the Persian Gulf, could restrict countries’ ability to export oil to the rest of the world. That would likely lead to higher crude oil and gasoline prices, energy experts say.
About 15 million barrels of crude oil per day – about 20% of the world’s oil – are shipped through the Strait of Hormuz, making it the world’s most critical oil chokepoint, according to Rystad Energy. Tankers crossing the strait, bordered to the north by Iran, carry oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the United Arab Emirates and Iran.
Iran temporarily closed parts of the strait in mid-February for what it called a military exercise. Further disruptions to this transport channel could lead to lower supply and higher oil prices.
“About a fifth of the world’s oil supply passes through the Strait of Hormuz, a vital artery for global trade, meaning markets are more concerned about barrel carrying capacity than spare capacity on paper,” Jorge Leon, Rystad’s senior vice president and head of geopolitical analysis, said in an email. “If flows across the Gulf are limited, additional production will provide limited immediate relief, making access to export routes far more important than overall production targets.”
Iran exports about 1.6 million barrels of oil per day, mainly to China, which may have to look elsewhere for supplies if Iranian exports are disrupted, another factor that could increase energy prices.
Energy experts say oil prices could rise when barrels begin trading Sunday evening. Rystad analysts predict that the price of a barrel of Brent, the international standard, could increase by $20 when markets open.
Brent crude oil closed on Friday at a seven-month high of $72.87.
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