OPEC+ is set to raise its output target again. The catch is that most of the producers doing the raising cannot actually move the oil. The Strait of Hormuz is still closed. That has trapped exports from Saudi Arabia, Iraq, Kuwait and the UAE.
Seven countries agreed to lift production targets by roughly 188,000 barrels a day for June. The seven are Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia and Oman.
It would be the third monthly increase in a row. The numbers come from sources who spoke to Reuters and a draft OPEC+ statement.
The point is not to flood the market right now. The point is to signal supply is ready to return as soon as the war stops. Even then, oil traders say it would take weeks or months for shipments to fully recover.
These seven members plus the UAE are the only OPEC+ countries that set the monthly production targets in recent years. They are also the only ones with room to actually pump more.
The UAE is leaving OPEC+ this week. That drops the group to 21 members. Iran is still inside the group, but is not part of the seven that meet on output.
The UAE's exit is bigger than a name leaving a list. It removes one of the few members that had room to add barrels once shipping returns.
The seven core members will meet again on June 7 to set the next month's quotas.
The U.S.-Iran war started on Feb. 28. Crude oil ran to a four-year high above $125 per barrel. Analysts warned of jet fuel shortages within one to two months and a global inflation spike.
OPEC+ output averaged 35.06 million barrels a day in March. That is down 7.70 million from February. Iraq and Saudi Arabia took the deepest cuts due to limits on exports.
Prices have eased on peace hopes. U.S. crude fell 3% Friday to settle at $101.94 a barrel. Brent fell nearly 2% to $108.17.
The move came after Iran sent an updated peace proposal to mediators in Pakistan. That raised hopes a settlement with the U.S. is still possible.
The setup leaves oil traders watching two things: the war and the strait. A peace deal would let the new output target turn into real barrels. Without one, the hike is paper only.
The U.S.-Iran peace talks have moved in fits and starts. Iran's latest proposal would reopen the strait first and leave nuclear talks for later. That is a shift, but Trump has not yet signed off.
For energy investors, the trade is split. Bullish if Hormuz stays shut and supply stays tight. Bearish if a deal comes together and OPEC+ supply finally hits the market.
Until Hormuz reopens, the only number that really matters is whether barrels can get on a ship. The output target is just a placeholder for now. The shipping route is the real story for traders.
