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- The contract is more expensive: OPEC+ decided to increase production despite the blockade of Hormuz
The contract is more expensive: OPEC+ decided to increase production despite the blockade of Hormuz
The ministers of the seven OPEC+ countries agreed to increase oil production by 188,000 barrels per day in June. The decision was made as part of a strategy carried out since the spring of 2025 and aimed at the gradual recovery of alliance production, as well as taking into account the withdrawal from the United Arab Emirates cartel. According to experts, it will not affect prices in the near future, since at the moment the main volumes of raw materials from the Persian Gulf countries cannot cross the Strait of Hormuz. Even if this artery is unblocked by June, oil prices will remain close to $100 per barrel.
What have the OPEC+ members agreed on?
The countries participating in the voluntary OPEC+ production adjustment agreed to increase the target level of oil production by 188 thousand barrels per day in June. The decision was made by seven countries: Russia, Saudi Arabia, Iraq, Kuwait, Kazakhstan, Algeria and Oman. The United Arab Emirates has left OPEC and OPEC+ since May 1 of this year and now they determine the level of production themselves.
The Seven OPEC+ Volunteers once again stressed that voluntary restrictions on oil production can be partially or completely returned, depending on the situation on the oil market. These countries are now returning oil production volumes that were reduced in April 2023.
During their last meeting in April 2026, then eight more OPEC+ member countries decided to increase production by 206 thousand barrels per day. At the same time, the UAE's quota for increased production was 18,000 barrels.
According to Valery Andrianov, associate professor at the Financial University under the Government of the Russian Federation, the decision of the OPEC+ Seven was made as part of a strategy carried out since the spring of 2025 and aimed at the gradual recovery of the alliance's production.
— In other words, it's just a movement by inertia. In fact, this decision is "paper", it will have absolutely no effect on the market and prices, the expert believes. — At the moment, the main volumes of raw materials from the Persian Gulf countries cannot cross the Strait of Hormuz, which is why OPEC+'s previous decision to increase production has not been implemented. Moreover, Saudi Arabia and other monarchies in the region have even reduced production. Against this background, the declarations about the increase in production look like phrases on duty, and not as real plans.
In his opinion, even if the Strait of Hormuz is fully unblocked by June and OPEC+ member countries manage to restore and possibly increase production, this will have little effect on prices.
— On the one hand, events in the Middle East have become a driver for increasing supplies from countries outside the alliance, primarily the United States. Therefore, OPEC+'s market share and price impact are steadily decreasing, while competition is growing. On the other hand, long after the end of the acute phase of the conflict, there will be a significant geopolitical premium in oil prices, since the threat of renewed hostilities will surely remain," believes Valery Andrianov. — And it is these two multidirectional factors — supply growth and the risk premium — that will compete with each other and determine the price level, not the efforts of OPEC+.
What was the oil market like the day before
Since the last meeting of the OPEC+ member countries, which took place on April 5, oil prices have hardly changed: by the close of trading on May 1, Brent prices were $109.19 per barrel, while in early April this figure was $109.
Investors have been following events in the Middle East all month. The temporary truce and ceasefire in the middle of the month had an impact on oil prices. On April 17 and 18, Brent was trading at $90 per barrel. However, towards the end of April, prices broke the mark of $118 per barrel. Moreover, on April 30, during trading, the price briefly reached $119, demonstrating a daily increase of 7%.
The main driver of growth was reports of Donald Trump's order to prepare a plan for an "extended blockade" of Iran. In response, Tehran confirmed its intention to block shipping in the Strait of Hormuz, through which about 20% of the world's oil and LNG supplies pass. At the moment, the strait remains virtually closed due to mutual threats: Tehran has declared any approaching vessel a military target in response to attacks by the United States and Israel. Washington, in turn, announced that it would forcibly deploy or intercept ships bound for Iranian ports.
In addition, it became known the day before that the United Arab Emirates is withdrawing from OPEC on May 1. But in the current situation, the news had no effect on prices.
According to OPEC, oil production in the UAE in January-February 2026 was about 3.4 million barrels per day. In March, missile strikes and drone attacks damaged production facilities, causing production to drop to 2.1 million barrels.
According to the Energy Information Administration of the U.S. Department of Energy, in March, Saudi Arabia reduced oil production by 1.9 million barrels per day compared with the February level of 10.4 million. Iraq reduced production the most — by 2.8 million from 4.37 million in February. Kuwait reduced production by 1.25 million barrels per day, while it produced 2.56 million in February, and the decrease in the UAE amounted to 1.11 million barrels from 3.4 million produced in February.
Tamara Safonova, Director General of the Independent Analytical Agency for the Oil and Gas Sector, stressed that today's quota adjustment "is only symbolic against the background of a significant decline in oil exports and production from the Persian Gulf countries."
"The results of the meeting showed the organization's cohesion despite the UAE's announcement of withdrawal from the alliance," she said.
According to Tamara Safonova, in order to preserve the alliance and strengthen OPEC+'s position, it is important not only to coordinate production quotas, but also to ensure a collective settlement of issues related to the organization of uninterrupted energy supplies through the Strait of Hormuz with the participation of Iran.
What can the oil market expect next
The recovery and even some increase in production of OPEC+ member countries and the establishment of consistently high prices of $80-90 per barrel in the medium term are very likely scenarios, Valery Andrianov believes.
— But they will happen not because such a decision was made in OPEC+, but because of objective reasons. And therefore, the alliance's decision essentially describes the likely scenarios for the development of the situation, rather than shaping them, following global trends, rather than defining them, as was the case in the early years of the deal. Today, it is not OPEC+ decisions that influence the market, but the market that influences OPEC+ decisions," he believes.
According to Dmitry Kasatkin, Managing Partner of Kasatkin Consulting, the effect of the Seven cartel's decision on the spot market will be weak. In his opinion, it is worth waiting for a decrease in prices by $ 1-2 per barrel, because current prices include a physical shortage due to the blockade of Hormuz.
— However, the impact on futures contracts at the end of the year will be greater — $4-6. OPEC+ is signaling that it is ready to return up to 2.2 million barrels per day to the market, but after the restoration of navigation through the Strait of Hormuz, the analyst believes.
Thus, Kasatkin does not expect prices to fall below $100 per barrel in the near future. In his opinion, only after the stabilization of production in the region and the restoration of supplies, which will take from six months, Brent prices will gradually return to the range of $ 75-85.
Dmitry Kasatkin believes that the current decision of the alliance is positive for Russia for two reasons. The first is the potential opportunity to increase exports. The second is the actual lack of alternative supplies and the desire of the United States to keep prices down at all costs, including by easing restrictions, which clears the way for these volumes.
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