OPEC+, the alliance of the Organization of the Petroleum Exporting Countries and its partner producers, on Sunday approved in principle a production quota increase of 206,000 barrels per day (bbl/d) for May. Group sources cited by Reuters said the increase would exist "largely on paper": the effective closure of the Strait of Hormuz (through which approximately 20% of global seaborne oil supply transits) since late February has prevented Saudi Arabia, the United Arab Emirates, Kuwait, and Iraq from exporting at normal volumes.
Energy Aspects, the energy research consultancy, was more direct, characterizing the quota increase as "academic" while disruptions at the strait persist. The market, according to the same sources, will respond to the operational status of Hormuz, not to the output decisions made Sunday.
Sunday's meeting involved eight group members — Saudi Arabia, Russia, the UAE, Kazakhstan, Kuwait, Iraq, Algeria, and Oman — and set production targets for May. The approved increment replicates the 206,000 bbl/d the group had agreed for April at its March 1 meeting, when the Middle East war was just beginning to disrupt Gulf flows.
12 to 15 Million Barrels Per Day Removed from the Market
A month after that first decision, the scale of the disruption has no historical precedent. OPEC+ sources cited by Reuters estimate the conflict has removed between 12 and 15 million bbl/d from the global market, equivalent to up to 15% of global supply and, by those estimates, the largest oil supply disruption on record.
Prices reflect that scale. Brent crude touched a four-year high of $119.50 this week, up from approximately $67 per barrel before the conflict began, and was trading around $109 as of April 5. The May West Texas Intermediate (WTI) futures contract closed Friday at $111.54, up 11% on the day. Prices briefly retreated toward $100 mid-week after U.S. President Donald Trump said the war would end "soon," then rebounded the following day when he clarified that military operations would continue.
Russia, another key group member, is also unable to offset Gulf production losses: Western sanctions and infrastructure damage stemming from the war in Ukraine constrain any realistic increase in output.
JPMorgan Warns: $150 If Hormuz Stays Closed Through Mid-May
JPMorgan warned Thursday that crude prices could top $150 per barrel (an all-time record) if flows through the Strait of Hormuz remain disrupted through mid-May. Larry Fink, chairman and chief executive of BlackRock, the world's largest asset manager, had warned weeks earlier that oil at that level would trigger a global recession.
The group's real spare capacity is concentrated almost entirely in Saudi Arabia and the UAE, which together hold approximately 2.5 million bbl/d in reserve, according to the International Energy Agency (IEA). Some analysts consider even that figure may be overstated. "Spare capacity is really only sitting in Saudi Arabia at this stage, with the rest of the producers effectively maxed out," said Helima Croft, head of commodity-markets strategy at RBC Capital Markets, the investment banking arm of Royal Bank of Canada, according to Bloomberg. Both Riyadh and Abu Dhabi also face export constraints as long as Hormuz remains closed.
The political signal behind the quota increase has a clear audience: positioning producers to add barrels the moment the strait reopens. "We need to react, at least on paper," an OPEC+ source told Reuters. For now, the market will watch the operational status of the strait, not the minutes of Sunday's meeting, for price direction.