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The global oil market is facing its worst supply disruption on record. The Middle East conflict has effectively closed the Strait of Hormuz since late February, cutting off a waterway that normally carries more than 20% of the world’s oil.
In response, OPEC+ met on Sunday and agreed to raise output quotas for May, a move that is largely symbolic, as the group’s key Gulf members cannot physically increase production while the crisis continues.
A Quota Increase That Exists Mostly on Paper
Eight members of OPEC+ approved the May quota rise during a virtual meeting on Sunday. The increase matches what the group agreed for April at its last meeting on March 1, the day after the conflict began disrupting oil flows. ⁽¹⁾
The 206,000 barrels per day increase represents less than 2% of the supply lost due to the Hormuz closure. Saudi Arabia, the UAE, Kuwait, and Iraq, the only OPEC+ members capable of meaningfully raising output even before the war, have instead been forced to cut production as their exports stall. ⁽²⁾
Combined cuts from Gulf producers are estimated at over 10 to 11 million barrels per day, or roughly 10% of global supply. Total OPEC output fell to 21.57 million barrels per day in March, its lowest level since June 2020. Russia, another major OPEC+ member, is also unable to raise output due to Western sanctions and infrastructure damage from the war in Ukraine. ⁽³⁾
OPEC+ sources say the quota increase signals the group’s readiness to restore supply once the waterway reopens, rather than reflecting any near-term production gain.
The Worst Oil Supply Disruption on Record
The closure of the Strait of Hormuz has removed an estimated 12 to 15 million barrels per day from global markets, up to 15% of total world supply. The International Energy Agency has called it the biggest supply disruption in the history of the oil market. ⁽⁴⁾
Crude prices surged to nearly $120 per barrel last month, pushing transport fuel costs higher for consumers and businesses worldwide and forcing governments to act to conserve supplies. Prices have since been trading around $100 per barrel.
JPMorgan warned that oil could spike above $150 a barrel, an all-time high if Hormuz remains blocked into mid-May. ⁽⁵⁾
Infrastructure Damage Will Have a Long Recovery
Beyond the blockade itself, missile and drone attacks on Gulf energy infrastructure have caused severe physical damage. Several Gulf officials have said it would take months to resume normal operations even if the war stopped and the strait reopened immediately.
Iran continued strikes on energy assets in the UAE, Bahrain, and Kuwait. OPEC+’s Joint Ministerial Monitoring Committee addressed this directly in a statement after its meeting on Sunday.
It warned that any attack on infrastructure or disruption of export routes increases market volatility and weakens the group’s efforts to stabilize supply.
Workarounds and What Comes Next
With the strait largely off-limits, some producers have found alternative routes. Saudi Arabia has rerouted shipments through a terminal on its Red Sea coast, while the UAE has increased exports from its port at Fujairah. The OPEC+ monitoring committee acknowledged these efforts, saying they helped reduce market volatility. ⁽⁶⁾
President Trump vowed further escalation last week, threatening to unleash consequences on Iran as a 10-day deadline for a peace deal approached. The next OPEC+ meeting will be held on May 3.
