Key members of the OPEC+ oil cartel announced a larger-than-expected increase in production quotas on Sunday after US and Israeli attacks on Iran sparked retaliation from Tehran across the Middle East.
The eight-member V8 group in the alliance, which includes top oil producers Saudi Arabia and Russia – as well as several Gulf states hit by Tehran’s missile attacks – said it had agreed to an “production adjustment” of 206,000 barrels per day (bpd).
“This adjustment will be implemented in April,” they said in a statement.
The text did not mention the outbreak of the conflict in Iran, but cited “a stable global economic outlook and current sound market fundamentals” as reasons for the increase.
Before the weekend meeting, experts had forecast a more modest increase of 137,000 bpd.
But Jorge Leon, an analyst at Rystad Energy, warned that the agreed increase may not be big enough to prevent the Iran conflict from causing a sharp rise in oil prices when trading opens on Monday.
“If oil can’t get through the Strait of Hormuz, an extra 206,000 bpd does little to ease the market,” Leon said, arguing that “logistics and transit risk matter more than production targets right now.”
The OPEC+ move “is unlikely to calm the markets,” he said. “Prices will respond to developments in the Gulf and the state of shipping flows, not a relatively small increase in production.”
Source: KYPE