Eight OPEC+ countries have raised the oil production limit for May by 206,000 b/d, as reported by the organization following its meeting on April 5. This aligns with the increase announced in April. As was the case a month prior, quotas for both Russia and Saudi Arabia have been raised by 62,000 b/d each. For Russia, the maximum oil production level for May is set at 9.69 million b/d, while Saudi Arabia's quota is established at 10.22 million b/d. Quotas for Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman have also been increased by the same amount as in April.
OPEC+ noted that it will continue to evaluate market conditions, emphasizing the importance of a cautious approach to quota adjustments. Additionally, the alliance expressed concern over attacks on energy infrastructure, stating that restoring damaged facilities will be a costly and time-consuming process. Any actions that undermine energy security, such as attacks on infrastructure or disruptions to international maritime logistics, elevate market volatility, as detailed in OPEC+'s statement. The next alliance meeting is scheduled for May 3, 2026.
OPEC+ has maintained its pace of quota increases amid disruptions in oil supply due to the military conflict in the Middle East. According to Kpler, in the initial three weeks of military actions, crude supply has decreased by over 130 million barrels. By the end of March, cumulative losses could exceed 250 million barrels, potentially reaching 600 million barrels by the end of April if supply does not resume.
Sergey Tereshkin, CEO of Open Oil Market, points out that leading oil-producing countries in the Middle East cannot guarantee a sharp increase in supply "here and now." Therefore, he suggests that OPEC+ has opted for a "temporary" decision: to raise quotas to a market-realistic level that can be sustained if the shipping situation in the Strait of Hormuz improves. This implies maintaining the status quo for the market, with Brent prices likely to hover around $110 per barrel. After the acute phase of the conflict subsides, the alliance countries may be able to enhance supply without exceeding their quotas, Tereshkin continues.
Andrey Polischuk, a senior analyst in the oil and gas sector at Euler, comments that more radical steps could lead to a surplus once the situation in the Strait of Hormuz normalizes. Igor Yushkov, an expert at the Financial University under the Government of Russia, adds that OPEC+'s decision to increase quotas amidst the inability of many Gulf countries to fully utilize them demonstrates the alliance's intent to assert control over the situation. However, he warns that the longer the conflict continues, the more damage the region's oil infrastructure suffers, raising concerns about how much crude countries will actually be able to export post-Blockage of the Strait of Hormuz.
Nevertheless, Kirill Bakhtin, head of the Analytics Center for Russian Stocks at BCS Global Markets, believes that the prospects for increasing production are good due to rising oil prices since February and provided that recent attacks on the ports of Leningrad region have resulted in minimal damage. "Increased production will help generate additional revenue for both companies and the Ministry of Finance. However, much will depend on the uninterrupted shipping of oil from key export ports," notes Sergey Tereshkin.
According to S&P Global Commodities at Sea, in the last week of March, Russia reduced its maritime oil exports from Ust-Luga by 4.5 times to 105,000 b/d and from Primorsk by one-third to 730,000 b/d. Overall shipments for the month fell by less than 1% compared to February, to 3.46 million b/d.
Source: Kommersant
