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(Bloomberg) — OPEC+ warned that damage to Middle East energy assets will have a prolonged impact on oil supply even after the Iran war ends, as it approved a symbolic increase in output quotas for next month.
“Restoring damaged energy assets to full capacity is both costly and takes a long time,” the group’s ministerial monitoring committee said in a statement after meeting on Sunday. Any action that jeopardizes security of supply, whether that’s an attack on energy infrastructure or disruption of export routes, increases market volatility and weakens OPEC+’s efforts, it said.
Key producers led by Saudi Arabia and Russia agreed to increase targets for May by about 206,000 barrels a day during a video conference.
With oil flows from the Persian Gulf throttled by the Iran war and top producers like Saudi Arabia, the United Arab Emirates, Iraq and Kuwait forced to curtail supplies, such a move by the group is theoretical. Still, it may symbolize their intention to revive output as soon as hostilities ease.
Oil prices have been roiled by five weeks of conflict, climbing to almost $120 a barrel last month as key Middle East energy assets came under attack and Iran effectively closed the critical Strait of Hormuz, creating what the International Energy Agency called the biggest supply disruption in the history of the market.
“The real story is not OPEC+ policy, it is the Strait of Hormuz,” said Jorge Leon, head of geopolitical analysis at Rystad Energy. “In a market where up to a fifth of global oil flows through Hormuz, disruptions there largely outweigh any incremental increase the group can announce.”
Benchmark Brent futures settled near $109 on Friday after US President Donald Trump vowed an escalation in the war, which could prolong disruptions to energy flows through the vital waterway. He subsequently threatened to unleash “all hell” on Iran, saying the time left on a 10-day deadline for it to make a peace deal with the US was running out.
OPEC Actions
Before the conflict erupted, eight major nations from the Organization of the Petroleum Exporting Countries and its partners had been gradually restoring supply halted back in 2023. They held production steady for the first three months of this year, then on March 1 — a day after the initial US and Israeli strikes on Iran — they agreed to a small increase of 206,000 barrels a day for April.
“We will monitor the situation and take all necessary measures to balance the market,” Russian Deputy Prime Minister Alexander Novak said in an interview with state television channel Rossiya 24 on Sunday. “The market is clearly unbalanced. This has a significant impact on demand globally, not only in the energy markets but also in the economy and the final supply.”
