8 OPEC members agree to increase oil production once Strait of Hormuz becomes navigable again

Eight OPEC members have reached an agreement to increase their oil production once the Strait of Hormuz becomes navigable again, Reuters reported, citing OPEC sources.

OPEC on Sunday said it will raise oil production quotas by 206,000 barrels a day in May. The modest increase is primarily a formal gesture, as major members find it impossible to boost output amid the ongoing US-Israeli conflict with Iran.

The hostilities have effectively blocked the Strait of Hormuz — the world's most critical oil corridor — since late February, halting exports from OPEC nations like Saudi Arabia, the UAE, Kuwait, and Iraq. These were the only members capable of significantly increasing production prior to the breakout of the conflict.

Crude valuations have climbed to a four-year peak nearing $120 per barrel, leading to skyrocketing costs for transportation fuels. This surge is straining global consumers and industries alike, forcing various governments to implement emergency measures to preserve existing energy supplies.

The approved quota hike of 206,000 bpd accounts for less than 2% of the total supply currently offline due to the Hormuz blockade.

‘Academic’ move

Consultancy firm Energy Aspects labelled the move "academic" so long as maritime disruptions in the strait continue to persist.

During the virtual session on Sunday, eight OPEC members consented to the May quota adjustments, according to an official statement. Beyond the obstacles facing Gulf nations, other participants, such as Russia, are also restricted from raising output. In Moscow’s situation, this is due to international sanctions and significant infrastructure damage sustained during the war with Ukraine.

In the Gulf region, the destruction of energy infrastructure from drone and missile strikes has been extensive.

Several regional officials have indicated that it would take months to restore standard operations and hit production goals, even if hostilities ceased and Iran opened the Strait of Hormuz immediately.

A separate OPEC body, the Joint Ministerial Monitoring Committee, also convened on Sunday. They voiced serious concerns about attacks on energy facilities, noting that repairs are both costly and slow, which directly impacts global supply stability, the organization stated.

Iraqi crude exempt from transit curbs

Iran claimed on Saturday that Iraq would be exempt from transit restrictions through Hormuz; shipping records from Sunday indeed showed a tanker carrying Iraqi crude navigating the strait.

Nevertheless, Reuters reported that it remains uncertain if other vessels will brave the associated risks.

The production increase for May mirrors the volume agreed upon by the eight members for April at their 1 March meeting. The meeting took place just as the war began interfering with the oil trade. A month later, this disruption — the largest on record — is estimated to have sidelined between 12 and 15 million bpd, or roughly 15% of the world's total supply.

JPMorgan warned on Thursday that oil prices might surge past an all-time record of $150 if Hormuz remains inaccessible through mid-May. While OPEC includes 22 members, only the eight nations that met Sunday have dictated monthly production shifts recently. Starting in 2025, they began reversing previous output cuts to reclaim market share, raising quotas by 2.9 million bpd through December 2025.

The group is scheduled for its next meeting on 3 May.