Brent crude traded at $72.87 a barrel on Saturday, up 2.03%, after OPEC+ agreed to raise production by 206,000 barrels per day starting in April. The increase, announced following a virtual meeting of the so-called V8 group, came in well above the 137,000 bpd that most analysts had penciled in.
Saudi Arabia, Russia, the UAE, Iraq, Kuwait, Kazakhstan, Algeria and Oman all backed the move. In its statement, the group pointed to a "steady global economic outlook and current healthy market fundamentals, as reflected in low oil inventories."
The eight producers have been unwinding 1.65 million bpd in voluntary cuts first announced in April 2023. They had paused those increases throughout the first quarter. Saturday's decision marks the restart of that process, though the group kept its options open. The cuts "may be returned in part or in full subject to evolving market conditions," the statement said.
Strait of Hormuz looms over the decision
The production bump arrives at a precarious moment. US and Israeli military strikes on Iran in late February triggered retaliatory missile attacks across the region. Iran's Revolutionary Guards have since declared the Strait of Hormuz closed to shipping, and Iranian state television reported a tanker being struck in the waterway.
Roughly a quarter of the world's seaborne oil passes through that narrow channel. If the strait stays blocked, an extra 206,000 barrels a day won't make much of a dent.
"If oil cannot move through Hormuz, an extra 206,000 barrels per day does very little to ease the market," said Jorge Leon, vice president at Rystad Energy. "Prices will respond to developments in the Gulf and shipping flows, not a relatively small output increase."
Oil could hit $100 if the US goes to war with Iran, FGE NexantECA's Fereidun Fesharaki warned last week, a scenario that looks less hypothetical by the day.
Market caught between surplus fears and supply risk
WTI crude climbed 1.81% to $67.02 alongside Brent's gains. Traders are weighing two opposing forces: a structural oversupply that the IEA pegged at 3.7 million bpd earlier this month, and the real possibility that Iranian disruptions knock millions of barrels offline.
Chevron's recent entry into Iraq's West Qurna 2 field, replacing sanctioned Lukoil, underscores how sanctions and conflict are redrawing the production map across the Middle East.
OPEC+ will hold monthly review meetings starting April 5 to monitor the situation. All eight V8 nations also committed to "fully compensate for any overproduced volume since January 2024," a nod to chronic quota-busting by Iraq and Kazakhstan that has tested Saudi patience in recent months.
What comes next
The group retained the right to "increase, pause or reverse" future adjustments at any time. With Hormuz traffic uncertain and Middle East tensions escalating daily, that flexibility may be tested sooner than anyone expected.