Opec+ boosts crude output in vain

The Opec+ decision to lift crude oil output by 206,000 barrels per day (bpd) from April is probably the least consequential decision the group has made in nearly a decade of existence.

- Clyde Russell

Adding about 0.2% of global oil demand to supply a month from now is little more than a symbolic gesture in the face of a widening conflict in the Middle East, which is already leading to serious supply disruptions.

But there was little the eight members of the Opec+ group undertaking voluntary production cuts could have done at their meeting on Sunday to assure the market about supply security.

The increase of 206,000 bpd from April was above the 137,000 bpd that had been tipped by analysts ahead of the meeting, and if there is any impact it's the symbolism of the group saying they can add more barrels to the market if needed.

Certainly, the Opec+ output decision wasn't enough to prevent crude prices spiking higher at Monday's open, with benchmark Brent futures jumping as much as 13.6% to a 12-month high of $82.37 (2,604 baht) a barrel, before easing to trade at $79.10 in early Asian trade.

The main issue for crude oil markets is how long supplies will be disrupted from the Middle East, and how top importers will react.

In the fog of war, there is always considerable uncertainty, and the current bombing and missile strikes by Israel and the United States against Iran, and the retaliation targeting neighbouring Gulf countries, are no exception.