Sources: OPEC+ plans to increase production, but it is difficult to implement amid Middle East conflicts

Golden Ten Data, April 5th – According to a Reuters report, four OPEC+ sources stated that the organization may approve an increase in oil production on Sunday. However, this rise will largely remain on paper, as major members are unable to actually boost output due to the war between Israel, the US, and Iran. Since the end of February, this war has effectively closed the Strait of Hormuz and cut exports from Saudi Arabia, the UAE, Kuwait, and Iraq. Other members such as Russia are unable to increase production due to Western sanctions and infrastructure damage during the Russia-Ukraine conflict. Damage to infrastructure from missile and drone attacks within the Gulf region is also severe. Several Gulf officials said that even if the war ends and the Strait of Hormuz is reopened immediately, it will take months to resume normal operations and reach production targets. OPEC+ sources indicated that the increase in production will have a limited short-term impact on supply but will signal that output can rise as soon as the Strait of Hormuz is reopened. Consultancy Energy Aspects pointed out that, as long as disruptions in the Strait continue, this production increase is “purely academic.”