Seven members of the OPEC+ grouping have provisionally agreed to raise their combined production targets by about 188,000 barrels per day for June, two people familiar with OPEC+ deliberations said. The accord was described as an agreement in principle and was reported ahead of a scheduled online policy meeting on Sunday.
Sources speaking on condition of anonymity said the proposed increase is largely symbolic at present. Physical exports have been substantially disrupted by the closure of much shipping through the Strait of Hormuz following the conflict involving the United States and Israel with Iran - developments that have had a bigger effect on the group's actual output than adjustments to agreed targets.
The planned June rise is comparable to last months boost of 206,000 barrels per day, with the difference reflecting the absence of the United Arab Emirates' share. In a surprise announcement earlier in the week, the UAE said it would leave the OPEC+ arrangement effective May 1. One of the sources said this sequence of events signals a desire among remaining participants to maintain a business-as-usual approach to monthly quota decisions.
The seven nations said to have reached the understanding are scheduled to meet online on Sunday. They are Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia, and Oman. While Iran is a member of OPEC, it was not among the seven set to meet, and the two sources noted the limitation of participation to those specific countries in recent monthly production decision-making.
The recent conflict, which began on February 28, and the subsequent closure of the Strait of Hormuz have constricted exports from several Gulf producers identified by sources as Saudi Arabia, Iraq, Kuwait, and the UAE. Before the conflict, those producers were the only members of the group positioned to raise output. Separately, Iran's own exports have been curtailed since April by a U.S. blockade, according to the information in the report.
OPEC reported last month that crude oil output across all OPEC+ members averaged 35.06 million barrels per day in March, a decline of 7.70 million barrels per day from February. The organization indicated that Iraq and Saudi Arabia recorded the largest reductions, citing constrained exports as the reason. Outside of the Gulf, Russia has also trimmed output after infrastructure was damaged by Ukrainian drone attacks, the report said.
With the UAEs departure, OPEC+ now includes 21 members including Iran, though in recent years the monthly production decisions have effectively involved only the seven nations plus the UAE. The tentative June increase of about 188,000 bpd therefore reflects the narrower grouping moving forward.
Key points
- Seven OPEC+ members have agreed in principle to a roughly 188,000 bpd increase in June production targets - energy and oil market sectors affected.
- The rise is largely symbolic amid major shipping disruptions through the Strait of Hormuz - impacting shipping, export-dependent producers, and refining sectors.
- The UAE has left OPEC+ effective May 1, leaving monthly production decisions concentrated among a smaller set of producers - implications for midstream and market coordination.
Risks and uncertainties
- Ongoing closure of the Strait of Hormuz due to the conflict has throttled exports from key Gulf producers - risk to global oil supply and shipping sectors.
- Irans exports remain cut by a U.S. blockade imposed in April - uncertainty for oil market balances and regional export flows.
- Damage to Russian infrastructure from Ukrainian drone attacks has reduced Russian output - a further source of supply volatility for energy markets.