OPEC+, considering increased oil production amid tensions in Iran… Could it become a price stabilization solution?

After the United States and Israel launched a large-scale airstrike on Iran, OPEC and its main oil-producing alliance, OPEC+, are considering increasing oil production more than initially expected. This appears to be a measure to address potential supply instability in the global oil market.

Prior to the airstrike, OPEC+ had planned to increase daily oil output by 137,000 barrels starting in April after a three-month pause in production increases. This was to meet rising summer demand and to counteract potential price hikes caused by the airstrike. The rising oil prices are putting additional pressure on member countries to boost production.

At today’s meeting, OPEC+ is expected to discuss further plans to increase oil output. From April to December last year, OPEC+ increased supply through additional production, but from January this year, they paused the increase due to seasonal demand reductions. However, recent supply instability caused by Iran tensions has prompted the organization to seek further increases again.

Saudi Arabia and the United Arab Emirates have already increased oil production and exports according to emergency plans. Saudi Arabia has raised output in anticipation of possible conflict with Iran; the UAE plans to expand exports of its main crude, Murban, starting in April.

Overall, influenced by potential U.S. attacks on Iran and China’s expansion of oil inventories, oil prices have risen about 19% this year. Brent crude recently climbed to around $73 per barrel, reaching a new seven-month high. If this trend of increasing oil production continues, efforts to stabilize prices are likely to persist.