OPEC+ countries including Saudi Arabia and Russia agreed to raise oil production starting in June, setting a pace of 188,000 barrels per day and describing the move as a step toward “market stability.” The seven-country commitment came after a virtual meeting Sunday and is set against a market disruption in which Iran blocks the Strait of Hormuz at the mouth of the Persian Gulf, limiting the flow of oil shipped from Gulf producers.
The OPEC+ group said the production increase is scheduled to begin in June and follows the Sunday virtual meeting among the seven members. In addition to Saudi Arabia and Russia, those countries are Algeria, Iraq, Kazakhstan, Kuwait and Oman.
The group said the decision is also framed by how it plans to manage compliance and changing supply conditions. OPEC+ said it would hold monthly meetings to “review market conditions, conformity, and compensation,” and it scheduled another meeting for June 7.
AP reported that the production increase is mostly symbolic because it comes while Iran blocks the Strait of Hormuz, a chokepoint through which about a fifth of the world’s trade in oil and natural gas typically passes. With ships unable to move normally through the area, the group said the disruption has stopped much of the oil shipped from Gulf producers and knocked millions of barrels a day off the global market.
The OPEC+ decision also arrives after the United Arab Emirates decided to leave OPEC, disrupting the 65-year-old alliance that AP said produces about 40% of the world’s crude oil and has major influence over energy prices. AP noted that Iran is among OPEC’s 12 member countries, while Russia is not part of OPEC proper and instead works through OPEC+ with the Vienna-based oil producers alliance.