OPEC+ Weighs Output Boost Amid Iran Crisis

The current standoff has effectively closed the Strait of Hormuz, a critical chokepoint for global energy supplies. Following joint US-Israeli strikes on Iran, Tehran's Revolutionary Guards reportedly warned tankers that no ships would be allowed to pass, bringing a halt to over 20% of the world's oil transit. In an emergency virtual meeting, eight OPEC+ members, including Saudi Arabia, Russia, and the UAE, agreed to increase production by 206,000 barrels per day starting in April. This modest increase comes after the group had paused output hikes for the first quarter of 2026 due to seasonal demand weakness. The next meeting to review this decision is scheduled for April 5th. The market is bracing for a significant price shock when trading resumes, with some analysts predicting a surge past $100 a barrel, a level not seen since mid-2025. Brent crude futures had already climbed to $72.48 a barrel on Friday in anticipation of the conflict. This new output boost is a partial and gradual return of the 1.65 million barrels per day in voluntary cuts that have been in place since April 2023 and were extended through the end of 2026. Before this incident, the broader OPEC+ alliance was withholding a total of 5.86 million barrels per day from the market to support prices. While Saudi Arabia and the UAE hold the majority of the world's spare production capacity, the blockade of the Strait of Hormuz presents a major physical barrier to getting that oil to market. This has led some industry experts to view the announced production increase as a largely symbolic gesture until the strait is reopened. Iran, despite sanctions, has been a significant oil exporter, with recent estimates showing exports of nearly 1.9 million barrels per day, much of it flowing to China. The current crisis not only threatens these exports but also the flow of oil from other major Gulf producers like Iraq and Kuwait.