The Organization of the Petroleum Exporting Countries said at a meeting on Sunday that was planned before the outbreak of the war that they would increase production by 206,000 barrels per day in April, which was more than analysts had expected. Countries that have increased production include Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman.
Attacks across the region, including on two ships traveling through the Strait of Hormuz, the narrow mouth of the Persian Gulf, could limit the ability to export oil to the rest of the world. This will lead to higher prices for crude oil and petrol, according to energy experts.
According to Rystad Energy, about 15 million barrels of crude oil per day – about 20% of the world’s oil – are transported through the Strait of Hormuz, making it the world’s most important oil hub. The tankers, which share a border with Iran in the north, transport oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, United Arab Emirates and Iran.
Iran temporarily closed parts of the strait in mid-February for what it said was a military exercise. Further disruptions to this shipping channel could lead to lower supplies and higher prices for oil.
“Around one-fifth of the world’s oil flows through the Strait of Hormuz, an important artery for world trade, meaning markets are more concerned about whether barrels can move than there is excess capacity on paper.” “If flows through the Gulf are restricted, additional production will provide limited immediate relief, and access to export routes will be more important than headline production targets.”
Iran exports about 1.6 million barrels of oil a day, mostly to China, which may need to source supplies elsewhere if Iranian exports are disrupted, another factor that could push up energy prices. Energy experts believe that oil prices will rise when barrel trading begins late on Sunday. Analysts at Rystad estimate that the price of a barrel of Brent crude oil, the international benchmark, could rise above $20 when trading resumes.
Brent crude oil closed at a seven-month high of $72.87 a barrel on Friday.
