Key members of the OPEC+ alliance have announced a larger-than-expected increase in oil production quotas following U.S. and Israeli strikes on Iran that triggered retaliatory attacks across the Middle East.
The eight-member “Voluntary Eight” (V8) group within the alliance which includes major producers such as Saudi Arabia and Russia agreed to raise output by 206,000 barrels per day (bpd). The adjustment is scheduled to take effect in April.
In a joint statement, the group cited “a steady global economic outlook and current healthy market fundamentals” as justification for the production increase, without directly referencing the escalating Iran conflict.
Before the weekend meeting, analysts had projected a more modest rise of 137,000 bpd. However, Jorge Leon of Rystad Energy cautioned that the agreed increase may not be sufficient to offset potential supply disruptions stemming from the conflict.
Leon highlighted concerns that Iran could target the Strait of Hormuz — a critical maritime corridor through which nearly a quarter of the world’s seaborne oil supplies transit as part of its retaliation strategy.
Iran’s Revolutionary Guards have reportedly notified vessels that the strait is closed. Iranian state television on Sunday aired footage of a burning oil tanker, claiming it was struck while attempting to pass through the waterway and was sinking.
“If oil cannot move through Hormuz, an extra 206,000 barrels per day does very little to ease the market,” Leon said, emphasizing that logistical constraints and transit risks currently outweigh production targets in determining price stability.
He added that the OPEC+ move is unlikely to immediately calm markets, as oil prices will be driven primarily by developments in the Gulf and the status of shipping flows.
In addition to Saudi Arabia and Russia, the V8 group comprises Kuwait, Oman, Iraq, the United Arab Emirates, Algeria, and Kazakhstan several of which have been directly affected by the recent escalation.
