Reuters sources indicate that the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to boost oil production by approximately 188,000 barrels per day in June, following a meeting of seven key members on 3/5.
This marks the alliance's third consecutive output increase since the Middle East conflict began in late February. Previously, they had twice approved plans to raise production by an additional 206,000 barrels per day each time.
Currently, these figures are largely symbolic, as the ongoing conflict disrupts supplies from the Gulf region. However, this move signals OPEC+'s readiness to pump more oil into the market once the conflict concludes, despite the United Arab Emirates (UAE) having left the group on 1/5.
 |
An oil rig belonging to state-owned oil company Aramco at an offshore field in Eastern Province, eastern Saudi Arabia, 5/2020. *Photo: AFP*
OPEC+ currently comprises 21 members, but only seven nations—Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia, and Oman—participate in the alliance's monthly output decisions.
The closure of the Strait of Hormuz over the past nine weeks significantly reduced oil exports from Saudi Arabia, Iraq, Kuwait, and former member UAE. These nations are also the remaining producers within the alliance capable of increasing output from spare capacity.
Collectively, crude oil production from all OPEC+ members averaged 35,06 million barrels per day in March, a decrease of 7,7 million barrels per day compared to February. Iraq and Saudi Arabia saw the largest production cuts due to export limitations.
On 1/5, Brent crude prices fell 2% to 108 USD per barrel, while WTI crude dropped 3% to 102 USD. The market declined after Iran's state news agency IRNA reported that the country had submitted its latest negotiation proposal to the US via Pakistan. This move is anticipated to break the deadlock in efforts to end the conflict.
According to traders, even if the Strait of Hormuz reopens, the flow of oil and gas through this shipping lane will require several weeks or even months to return to normal. OPEC+ is scheduled to meet again on 7/6.
Phien An (according to Reuters)
