Opec+ agrees to modest oil output boost as war disrupts shipments

Opec+ agreed a modest oil output boost of 206,000 barrels per day for April on Sunday just as the US-Israeli war on Iran and Tehran's retaliation disrupted oil flows from key members of the producer group in the Middle East.

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Riyadh has been increasing oil production and exports in recent weeks in preparation for US strikes on Opec+ member Iran, sources have told Reuters.

Oil, gas and other shipments from the Middle East via the Strait of Hormuz have come to a halt since Saturday after shipowners received a warning from Iran saying the area was closed for navigation. Hundreds of ships dropped anchor and were not moving on Sunday. Hormuz is the world’s most important oil route accounting for over 20% of global oil transit.

Despite fears of a glut that would weigh on prices, global benchmark Brent crude has rallied this year and jumped on Friday to $73 per barrel, the highest level since July, on fears of a wider conflict in the Middle East.

Brent traded 8-10% up around $80 per barrel over the counter on Sunday, traders said.

"This move is unlikely to calm markets," said Jorge Leon, a former Opec official who now works as head of geopolitical analysis at Rystad Energy. "Prices will respond to developments in the Gulf and the status of shipping flows, not to a relatively small increase in output." Opec+ will raise production by 206,000 barrels per day from April, it said in a statement on Sunday. It had debated options ranging from 137,000 bpd to 548,000 bpd, according to five sources who declined to be named because they are not authorised to speak to the press.