As the global oil crisis widens and tensions across the Middle East and US-Iran escalate, OPEC (Organization of the Petroleum Exporting Countries) has agreed to increase oil production. output quotas.
The new quotas of oil output are set at 206,000 barrels per day for May, a rise that is largely symbolic as some of its key members are unable to raise production due to the US-Israeli war on Iran.
The war has effectively blocked the Strait of Hormuz—the world's most important oil route, since the end of February and cut exports from OPEC+ members Saudi Arabia, the United Arab Emirates (UAE), Kuwait and Iraq.
The rise is largely symbolic as some key members are unable to raise production amid the US-Israel war on Iran.
In a statement on Sunday, eight members of OPEC+, including Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman, agreed to increase May quotas during a virtual meeting.
“The countries will continue to closely monitor and assess market conditions and their continuous efforts to support market stability,” the statement read.
“Eight countries also expressed concern regarding attacks on energy infrastructure, noting that restoring damaged energy assets to full capacity is both costly and takes a long time, thereby affecting overall supply availability,” it added.
While the quota increase represents less than two percent of the supply disrupted by the closure of the strait, OPEC+ sources told the Reuters news agency that the pledge had signaled readiness to raise output once the waterway reopens.
Notably, the crude prices have surged to a four-year high amid the war, close to $120 a barrel, leading to higher prices for transport fuels.
On Thursday, JPMorgan said oil prices could spike above $150, an all-time high, if oil flows through the Strait of Hormuz remain disrupted into mid-May.
