OPEC+ Weighs Output Boost Amid Iran Crisis

The immediate trigger for the OPEC+ discussion was the effective closure of the Strait of Hormuz, a chokepoint for about 20% of the world's daily oil consumption. Following US-Israeli military strikes, Iran's Revolutionary Guards warned tankers that passage was not allowed. In response to the blockade, shipping data showed at least 150 tankers carrying crude oil and LNG had dropped anchor in the Gulf, choosing not to transit the strait. A prolonged closure could remove up to 15 million barrels per day of crude from reaching their destinations, with analysts warning prices could surge past $100 a barrel. Even before the meeting, key producers were ramping up shipments to cushion the market. In February, Saudi Arabia's crude exports were on track to average 7.3 million barrels per day, the highest level since April 2023 and an increase of more than 400,000 barrels per day from January. The resulting OPEC+ agreement will increase production by 206,000 barrels per day for the month of April. This decision reverses a previous plan to pause supply hikes for the first quarter of 2026 due to seasonal demand factors. The ability to increase production rests on the cartel's spare capacity, which is the volume of oil that can be brought online within 30 days. OPEC+ holds an estimated 4.5 million barrels per day of spare capacity, mostly concentrated in Saudi Arabia and the UAE. Oil markets are now bracing for a significant price jump despite the planned output boost. After Brent crude closed around $67 a barrel on Friday, some analysts predict prices could surge by as much as $20 at the start of trading, potentially reaching $90 a barrel without a rapid de-escalation.