OPEC+ warns that supply disruptions will become long-term, approves an average daily increase of 206k barrels in May.

The oil market is currently being driven more by ongoing geopolitical disruptions than by incremental policy adjustments. The Organization of the Petroleum Exporting Countries and its allies (OPEC+) warn that even if the Iran war ends, damage to energy infrastructure in the Middle East could continue to put pressure on supply. After a recent ministerial oversight meeting, the group emphasized that restoring production capacity is both costly and takes a long time, indicating that current supply constraints may last longer than the market originally expected. Against this backdrop, after weeks of fighting, oil prices have still remained high. Oil prices previously came close to $120 per barrel, and developments concerning the Strait of Hormuz—the key artery for global oil flows—remain sensitive.

Meanwhile, OPEC+ has approved raising the production target in May by about 206,000 barrels per day, but under current conditions, the move appears largely symbolic. With exports from the Persian Gulf severely constrained and output in oil-producing countries in the region below normal levels, this production increase may reflect a forward-looking signal rather than an immediate supply response. Before the outbreak of the conflict, the group had already begun gradually restoring previously cut production, including a similar-sized increase agreed in April. However, the current supply-demand imbalance remains severe; it is estimated that daily supply disruptions total about 10 million barrels, or about 10% of global supply. Efforts by Saudi Arabia and the United Arab Emirates to reroute transportation through alternative ports have helped stabilize oil flows at the margin, although they do not fully replace volumes that are normally shipped through the Strait of Hormuz.

The Strait of Hormuz continues to dominate market dynamics. Although there are some signs of recovery, transit is constrained due to limited passage and Iran’s control over passage (including selective passage and toll measures), which restricts the strait’s shipping volumes. Pressure from outside the region is also increasing, with Russia’s exports facing disruptions linked to attacks on infrastructure. Although OPEC+ officials have reiterated that they are prepared to monitor the situation and take further action if necessary, the current picture suggests that the normalization of supply may be uneven and prolonged. For investors, in the short term, the oil flow patterns through key chokepoints such as the Strait of Hormuz may be more important than incremental production adjustments.

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