OPEC+ set to agree third oil output quota hike since Hormuz closure, sources say

Seven OPEC+ countries have agreed to raise oil output targets by about 188,000 barrels per day in June, the third consecutive monthly increase, the sources said and a draft OPEC+ statement showed.

The move is designed to show the group is ready to raise supplies once the war stops. It is also pressing on with plans to raise output targets despite the departure of the United Arab Emirates from the group this week, sources said.

The seven members meeting on Sunday are Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia, and Oman. With the UAE leaving, OPEC+ includes 21 members, including Iran, but in recent years, only the seven nations plus the UAE have been involved in monthly production decisions.

The Iran war, which began on Feb. 28, and the resulting closure of Hormuz have throttled exports from OPEC+ members Saudi Arabia, Iraq, and Kuwait, as well as from the UAE. Before the conflict, these producers were the only countries in the group that could increase production.

The output hike will remain largely symbolic until shipping through the Strait of Hormuz reopens, and even then, it will take several weeks, if not months, for flows to normalize, oil executives from the Gulf and global oil traders have said.

The disruption propelled oil prices to a four-year high above $125 per barrel as analysts predicted widespread jet fuel shortages within one to two months and a spike in global inflation.

Crude oil output from all OPEC+ members averaged 35.06 million bpd in March, down 7.70 million bpd from February, OPEC said in a report last month, with Iraq and Saudi Arabia making the biggest cuts due to constrained exports.

Seven members of OPEC+ will meet again on June 7, the draft statement said.

Oil prices fell on Friday after Iran sent an updated peace proposal to mediators in Pakistan, raising hopes again that a settlement with the U.S. is still possible.

U.S. crude oil futures fell 3% to close at $101.94 per barrel. The international benchmark Brent crude lost nearly 2% to settle at $108.17.