OPEC on Sunday agreed to boost oil production by another 206,000 barrels daily, which will be theoretical only as production in the Middle East remains constrained by the Strait of Hormuz crisis.
The move was expected, with reports saying the eight OPEC members that are managing their production stand ready to start adding barrels quickly should the situation in the Persian Gulf change.
More than 20% of global oil flows normally pass through Hormuz. That flow is now constrained by the U.S.-Israeli war with Iran. Saudi Arabia, Iraq, Kuwait, and the UAE have already curtailed output as exports stall, with the combined cuts seen at over 11 million barrels daily. Prices pushed toward $120 per barrel as a result last month but have since retreated somewhat.
At the time of writing, Brent crude was trading at $109.73 per barrel, with West Texas Intermediate at a rare premium to the international benchmark, trading at $111.20 per barrel, after President Trump delivered yet another threat to Iran, using unusually strong language and giving Tehran yet another deadline to reopen the Strait of Hormuz or “face hell”.
Meanwhile, Reuters reported last week that OPEC’s combined oil output losses for March were estimated at 7.2 million barrels daily, based on data from LSEG and analytics providers including Kpler.
The biggest production cuts were made by Kuwait, Iraq, the United Arab Emirates, and Saudi Arabia, for a total OPEC output of 21.57 million barrels daily for March. This is the lowest OPEC production rate since June 2020, Reuters noted in its report. Venezuela and Nigeria were the only OPEC members that saw their oil production increase in March.
Iranian attacks on infrastructure in the Gulf countries continued, with UPI reporting Sunday fresh strikes in the UAE, Bahrain, and Kuwait. The prospects of the Strait of Hormuz reopening anytime soon remain distant.
By Irina Slav for Oilprice.com