Key Points:
- OPEC+ may increase oil output after the US and Israel attacked Iran.
- The group meets on Sunday to discuss a potential supply hike.
- Oil prices hit $73 a barrel before the military strikes began.
- Saudi Arabia and the UAE hold millions of barrels in reserve.
OPEC+ members will discuss increasing oil supplies significantly this Sunday. This urgent meeting follows a shock military attack by the United States and Israel on Iran. Before the airstrikes, the group led by Saudi Arabia and Russia planned only a modest production hike. Now, the threat of a full-blown energy crisis forces them to reconsider their strategy.
Delegates say the group originally intended to add just 137,000 barrels a day starting in April. However, the situation changed overnight. President Donald Trump announced major combat operations on Saturday, urging Iranians to overthrow their government. In response, Tehran claimed it struck US military bases in the UAE, Bahrain, Qatar, and Kuwait.
Oil prices were already climbing before the missiles flew. Futures hit a seven-month high of $73 a barrel in London on Friday. Prices have jumped 19 percent this year because of sanctions and supply disruptions. Jeff Currie from Carlyle Group notes that the predicted market surplus turned out to be fiction, leaving the market with no room for error.
The biggest fear for traders involves the Strait of Hormuz. Roughly one-fifth of the world’s seaborne oil passes through this narrow channel. If the conflict shuts it down, global energy markets could panic. Reports also mention an explosion at Kharg Island, a critical Iranian oil terminal, raising concerns about supply lines.
Saudi Arabia and the United Arab Emirates hold the key to stabilizing prices. Saudi Arabia has about 1.8 million barrels of spare daily capacity, while the UAE has a contingency plan to deploy another 1 million barrels. Riyadh has faced this pressure before and temporarily boosted supplies during previous conflicts to keep the market steady.
President Trump wants lower fuel prices despite the military offensive. The oil cartel must now decide whether to open the taps wide to prevent a global price shock or wait to see how the conflict unfolds.
