Eight members of OPEC+ have agreed to increase oil output quotas by 206,000 barrels per day for May, following a virtual meeting on Sunday, the group announced in a statement.
However, the modest rise will largely exist only on paper, as key members are unable to increase production due to the ongoing US-Israeli war with Iran, which has effectively shut the Strait of Hormuz since late February.
The strait is the world’s most important oil route, and its closure has cut exports from OPEC+ members Saudi Arabia, the UAE, Kuwait, and Iraq — the only countries in the group that were able to significantly raise production even before the conflict began.
Crude prices have surged to a four-year high close to $120 per barrel, leading to soaring transport fuel prices that are pressuring consumers and businesses worldwide and triggering government action to conserve supplies.
The OPEC+ quota increase of 206,000 barrels per day represents less than two percent of the supply disrupted by the Hormuz closure, but OPEC+ sources told Reuters it signals readiness to raise output once the waterway reopens.
A separate OPEC+ panel, the Joint Ministerial Monitoring Committee, also met on Sunday and expressed concern about attacks on energy assets, saying they are expensive and time-consuming to repair and therefore impact supply.
Besides disruptions affecting Gulf members, others such as Russia are unable to increase output due to Western sanctions and damage to infrastructure inflicted during the war with Ukraine.
The largest oil supply disruption on record is estimated to have removed as many as 12 to 15 million barrels per day — up to 15 percent of global supply.
JPMorgan warned on Thursday that oil prices could spike above $150, an all-time high, if flows via the Strait of Hormuz remain disrupted into mid-May.
Inside the Gulf, damage to infrastructure from missile and drone attacks has been severe. Several Gulf officials have said it would take months to resume normal operations and reach production targets even if the war stopped and the strait reopened immediately.
The eight OPEC+ members hold their next meeting on May 3.
