Opec+ approves fourth oil output quota hike since Hormuz closure
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Opec+ agreed on Sunday on a fourth increase in its oil output targets in as many months, even though the US war with Iran is still preventing several of the group’s members from pumping more. The war has cut oil flows via the Strait of Hormuz, creating the world’s biggest-ever supply crisis as key Opec+ members, including Saudi Arabia, have been unable to supply customers in full since the end of February. The crisis for Opec+ deepened when the United Arab Emirates left the Organisation of the Petroleum Exporting Countries (Opec) after almost 60 years. Seven core members of Opec+, which groups Opec and allied producers including Russia, have increased their output quotas from April to June by almost 600,000 barrels per day. Impact of production target increase In reality, the group’s production has collapsed due to export cuts by Gulf members, averaging 33.19 million barrels per day in April compared with 42.77m in February, according to Opec figures. On Sunday, the seven members decided to increase targets by 188,000 bpd from July, Opec said in a statement. This is the same as the June hike, which was adjusted down from monthly increases of 206,000 bpd in May and April to take into account the UAE exit. “An Opec+ production increase means very little while the Strait of Hormuz remains closed,” said Jorge Leon, an analyst at Rystad and a former Opec official. When the Strait of Hormuz reopens, the market could move very quickly from fear of shortage to fear of surplus.” On Friday, oil prices fell to around $93 a barrel as traders gained confidence that renewed conflict between the US and Iran was growing less likely. Prices were close to $72 before the war began. Open+ almost done with unwinding 2023 output cut The seven countries are increasing production as part of the gradual unwinding of a 1.65m bpd production cut that the group, which at the time included UAE, agreed in 2023. From July, the seven have about 567,000 bpd of the original cut to return to the marke