OPEC+ raises oil production as US-Iran war threatens energy stability

OPEC+ raises oil production as US-Iran war threatens energy stability

The OPEC+ oil alliance has decided to raise its oil production quotas for the second consecutive month.

The decision comes amid rising concerns over global energy markets due to ongoing US-Iran war affecting supply routes.

The increase will see an additional 206,000 barrels per day (bpd) in production quotas from May onward by member countries including Russia and Saudi Arabia.

OPEC+ warns of long-term impact on global supplies

OPEC+ has warned that damage to energy infrastructure could increase oil market volatility, potentially affecting global supplies for a long time.

The cartel stressed the importance of protecting international maritime routes to ensure the uninterrupted flow of energy.

This comes as Iran's attacks on key energy facilities in several neighboring countries and threats against tankers passing without permission have severely restricted exports from the Gulf region.

Vital trade route almost at a standstill

Before the outbreak of war, nearly 20% of global oil and liquefied natural gas (LNG) passed through the Strait of Hormuz.

However, due to Iran's aggressive actions, ship traffic through this vital route has been virtually halted.

The situation raises questions about whether oil can reach global markets even if OPEC+ members in the region manage to ramp up production.

V8 group also raised production quotas last month

Last month, the eight-member V8 (Voluntary Eight) group within the OPEC+ cartel also decided to raise production quotas by 206,000 bpd.

In a joint statement on Sunday, they echoed OPEC+'s concerns over actions undermining energy supply security.

The group includes Saudi Arabia, Russia, Iraq, UAE, Kuwait Kazakhstan Algeria and Oman who have all praised members for finding alternate export routes to deliver oil amid these challenging circumstances.