In a major development, OPEC+ has agreed in principle to raise oil production by about 206,000 barrels per day (bpd), even as the US-Israel military action against Iran has disrupted shipments across the Gulf, Reuters reported citing sources.
The decision comes after US strikes on Iran – which killed Supreme Leader Ayatollah Ali Khamenei – triggered retaliation from Tehran and halted navigation through the Strait of Hormuz, the world’s most critical oil transit route.
While OPEC+ has a history of raising oil output to cushion disruptions, research analysts interviewed by Reuters suggest that the oil major currently has only little spare capacity to add to supply.
As per the report, the only exceptions to this supply chokepoint in the group are its leader Saudi Arabia and the United Arab Emirates, who will also struggle to export oil until navigation in the Gulf returns to normal.
According to the Reuters report, Riyadh has been raising oil production and exports in recent weeks ahead of US’s Saturday daylight strikes on Iran suggesting either strong geopolitical analysis or prior intimidation from a player engaged in the war.
Oil, gas and other shipments from the Middle East via the Strait of Hormuz have come to a halt since Saturday after shipowners received a warning from Iran saying the area was closed for navigation and certain tankers from Oman were hit by attackers based in Iran.
Hormuz disruption rattles markets
Following the closure of the Strait of Hormuz that contributes roughly 20% of the entire global energy trade, oil prices rose to $73 per barrel on Friday, the highest level since July, amid fears of a wider Middle East conflict and prolonged supply disruption.
The recent surge in oil prices have sparked concerns of a rather turbulent inflationary spiral of energy prices among economists and governments. Analysts have warned that prices could surge further. RBC Capital Markets’ Helima Croft said a broader war could push crude above $100 per barrel. Barclays analysts have echoed similar projections, according to Reuters and IANS.
Who participated?
The meeting involved eight key OPEC+ members: Saudi Arabia, Russia, the UAE, Kazakhstan, Kuwait, Iraq, Algeria and Oman. While OPEC+ includes a broader coalition of producers, most supply decisions in recent years have been taken by this core group.
The eight nations had earlier agreed to gradually raise production quotas by 2.9 million bpd between April and December 2025 (roughly 3% of global demand) before pausing increases from January to March 2026 due to seasonal demand weakness.
As per a Reuters report, members of the OPEC+ debated production hikes ranging from 137,000 bpd to 548,000 bpd before settling on the 206,000 bpd increase.
Formed in 2016, OPEC+ is an alliance between the core 12-member OPEC organization (primarily Middle Eastern and African nations) and 10 non-OPEC allies, including Russia, Mexico, and Kazakhstan, to manage global oil production and stabilize prices.
What next?
As per analysts interviewed by IANS and Reuters, the effectiveness of the latest output hike will depend on how quickly the Strait of Hormuz reopens and whether the conflict escalates further. Without restoration of Gulf shipping flows, additional production may not immediately translate into higher global supply.
(With inputs from Reuters)