OPEC+ to Increase Oil Production Amid Geopolitical Tensions
On Sunday, OPEC+ decided to increase oil production by a modest 206,000 barrels per day starting in April. This move comes as tensions rise due to the U.S. and Israeli military actions against Iran, which are disrupting oil flow from key producers in the Middle East.
Although OPEC+ has historically ramped up output during supply disruptions, analysts note that current capacity for increasing supply is limited, particularly for members other than Saudi Arabia and the UAE. Many of these countries might find it challenging to export oil until shipping through the Gulf stabilizes.
Reports indicate that Saudi Arabia has enhanced its oil production and exports by approximately 500,000 barrels daily in anticipation of potential U.S. strikes on Iran, an OPEC+ member.
Shipments of oil, gas, and other goods from the Middle East via the Strait of Hormuz have been halted since Saturday, following warnings from Iran that the strait was closed to shipping traffic.
Consequently, numerous vessels are now anchored and several ships have reportedly been attacked. The Strait of Hormuz is a pivotal route, accounting for over 20% of the world’s oil shipments.
Despite fears that an oversupply could negatively affect prices, global benchmark Brent crude has seen a rise this year, reaching $73 per barrel on Friday, the highest level since July, driven by concerns over the escalating conflict in the region.
On Sunday, traders noted an increase in Brent prices, which were trading up around 8% to 10%, hitting approximately $80 a barrel.
Jorge León, a former OPEC official currently leading geopolitical analysis at Rystad Energy, expressed skepticism about the effectiveness of OPEC+’s production increases in stabilizing the market.
According to a statement from OPEC+, the planned production increase of 206,000 barrels a day varies from options discussed that ranged between 137,000 to 548,000 barrels per day, based on information from unnamed sources.
“Oil prices will likely respond more to developments in the Gulf and shipping conditions rather than these relatively small production changes,” León added.
While this production increase marks the end of a three-month pause in output, it represents less than 0.2% of global supply. Middle Eastern leaders have cautioned the U.S. that a conflict with Iran could potentially push oil prices above $100 a barrel, according to Helima Croft, a seasoned OPEC analyst at RBC. Barclays analysts echoed this sentiment, predicting similar price increases.
Croft emphasized that OPEC’s planned increases may have limited effectiveness due to the insufficient production capacity among members outside Saudi Arabia.
“The tightening market in the first quarter might allow for some capacity expansion, but only a small portion of the actual barrels will make it to market,” noted Giovanni Staunovo, an oil analyst at UBS.
It seems that the decline in available spare capacity for OPEC+ influenced the decision against further production hikes. The meeting was attended by only eight OPEC+ member nations: Saudi Arabia, Russia, UAE, Kazakhstan, Kuwait, Iraq, Algeria, and Oman. In recent years, most production adjustments have been implemented by these eight countries.
From April to December 2025, these members increased their production quotas by around 2.9 million barrels per day, representing about 3% of global demand, but they suspended any further increases from January to March due to seasonal fluctuations.
