OPEC+ to Increase oil output, warns recovery May be slow

Eight members of OPEC+ have agreed to slightly increase oil production starting in May.

The group said it will raise output by 206,000 barrels per day. However, this increase may not have much real impact because some countries cannot boost production due to ongoing conflicts.

The current crisis is linked to tensions involving Iran, Israel, and the United States. The situation has disrupted oil supply, especially through the Strait of Hormuz, one of the world’s most important oil routes.

Since late February, the conflict has reduced oil exports from major producers like Saudi Arabia, the UAE, Kuwait, and Iraq. Although one tanker carrying Iraqi oil recently passed through the strait, it is still unclear if others will follow due to safety concerns.

An OPEC+ monitoring group also warned that attacks on oil facilities are damaging infrastructure. Repairs are expensive and take time, which further affects supply.

Because of these disruptions, global oil prices have risen sharply, reaching nearly $120 per barrel, the highest level in four years. This has increased fuel costs, putting pressure on consumers and businesses worldwide.

Experts estimate that the supply loss could be as high as 12 to 15 million barrels per day, which is about 15% of global supply. The planned increase by OPEC+ is less than 2% of that loss.

There are also other challenges. For example, Russia cannot raise production due to sanctions and damage from its war with Ukraine.

If the situation does not improve and the Strait of Hormuz remains closed, analysts warn that oil prices could rise above $150 per barrel.

OPEC+ said the small increase shows it is ready to boost production further once conditions improve. The group will meet again on May 3 to review the situation.