There is very little OPEC can do
In the shadow of a war that has sealed one of the world's most vital maritime passages, OPEC+ gathers not as a force capable of shaping markets, but as an institution confronting the limits of collective will against physical reality. The Strait of Hormuz closure has stripped nearly 20 million barrels of daily flow from global supply, nearly doubling prices and rendering the cartel's production pledges little more than symbolic gestures. What was once a powerful alliance of 21 nations now finds itself fractured from within — the UAE's departure a quiet signal that the architecture of coordinated oil governance may be quietly coming undone.
- A war-driven blockade of the Strait of Hormuz has cut a fifth of the world's daily oil supply, sending prices surging in ways no cartel decision can reverse.
- OPEC+ daily production has collapsed from roughly 43 million to 33 million barrels, and the members best positioned to compensate are themselves trapped behind the closed strait.
- Only seven of the cartel's 21 members can physically increase output, exposing how hollow a unified production pledge has become when the infrastructure to deliver it is paralyzed.
- The UAE's exit from OPEC+ has cracked the cartel's facade of solidarity, with analysts warning that a similar move by Iraq could effectively end the organization as a market force.
- Saudi Arabia is scrambling to hold the alliance together through flexible quotas and softer penalties, but the compensation mechanisms that once bound members are losing meaning in a market defined by force majeure.
- China's drawdown of strategic reserves is temporarily softening the price ceiling, but that buffer is finite — and when it runs out, a fractured OPEC+ will have little left to offer.
OPEC+ ministers convened online Sunday to vote on modest production increases, hoping to push back against oil prices that have nearly doubled since the Iran-U.S.-Israel conflict effectively closed the Strait of Hormuz in late February. On paper, the plan called for raising output by around 188,000 barrels a day. In practice, analysts were nearly unanimous: the numbers would change very little.
The strait, which normally carries roughly 20 million barrels of oil and gas daily — about a fifth of global supply — has remained functionally shut since American and Israeli strikes on Iran triggered retaliatory threats across the region. The shock has sent inflation rippling across continents. Yet OPEC+ finds itself structurally unable to respond. Only seven of its 21 members — Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman — have the spare capacity to pump more. The rest cannot. And even those seven face the same bottleneck: the closed strait blocks their access to global markets. Cartel production has fallen from nearly 43 million barrels a day before the conflict to just 33 million, with the real figure likely lower still.
Saxo Bank commodities analyst Ole Hansen was blunt: there is very little OPEC can do. The cartel's founding mission — stable supply and stable income — has been neutralized by forces it cannot control. Traders have stopped treating production pledges as meaningful signals.
The crisis has also accelerated internal fractures. The UAE, one of OPEC's most capable producers, recently announced its departure, unwilling to cap its output while revenue opportunities beckoned. Finance lecturer Lawrence Haar noted that Abu Dhabi simply wanted to maximize earnings without cartel constraints. Should Iraq follow, analysts suggest it could mark the functional end of OPEC+ as a coherent institution.
Saudi Arabia is working to prevent further defections — possibly through looser quotas or relaxed penalties — but the incentive structures that once held the alliance together have lost much of their force. For now, China's unusual restraint in purchasing crude, drawing instead on strategic reserves, is keeping prices from climbing even higher. But that cushion is temporary. Until the Strait of Hormuz reopens and the cartel finds a way to reconstitute itself, OPEC+'s influence over global oil markets has been reduced to almost nothing.
The ministers of OPEC+ were gathering online on Sunday to discuss raising oil production quotas, hoping to wrestle down prices that had climbed steeply since war between Iran and the United States and Israel had effectively sealed off one of the world's most critical shipping lanes. The math looked straightforward on paper: increase output by roughly 188,000 barrels a day, the kind of modest bump the cartel had grown accustomed to announcing. But analysts watching the meeting knew the numbers would likely mean very little.
Since late February, when American and Israeli strikes on Iran triggered retaliatory threats that have kept the Strait of Hormuz functionally closed, oil prices have nearly doubled. That narrow waterway normally carries about a fifth of the world's oil and gas—roughly 20 million barrels a day. With it choked off, the global economy has felt the shock in inflation pressures rippling across continents. Yet OPEC+, the alliance of 21 major oil-producing nations and their partners, finds itself nearly powerless to fix the problem.
The core issue is brutal in its simplicity: only seven members of OPEC+ actually have the spare capacity to pump more oil. Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman could theoretically increase their output. The other fourteen cannot. More damaging still, the very producers who might help—the major Gulf states—are largely locked out of global markets because of the Strait closure. OPEC+ itself reported that daily production had collapsed to 33 million barrels, down from nearly 43 million before the conflict began. The real figure is probably even lower, analysts say, given the American blockade on Iranian ports and the tankers that remain stranded in the region.
Ole Hansen, a commodities analyst at Saxo Bank, put it plainly: any production increases OPEC+ announced would have limited practical value. "There is very little OPEC can do," he told the news agency AFP. The cartel's fundamental mission—to secure steady petroleum supplies and stable income for producers—has been effectively neutralized by forces beyond its control. Traders know that pledges to raise output cannot overcome the physical reality of a closed strait.
The cartel's troubles run deeper than the immediate crisis. The United Arab Emirates, one of OPEC's most significant members and a nation with enormous spare production capacity, recently announced it was leaving the organization. Abu Dhabi had made clear it wanted to maximize output without being constrained by cartel quotas. Lawrence Haar, a finance lecturer at the University of Brighton, observed that the UAE simply did not want to be dictated to—it wanted to chase revenue. That defection signals a broader fragmentation. If Iraq, another heavyweight, were to follow the UAE out the door, analysts suggested it could mark the effective end of OPEC+ as a meaningful force.
Saudi Arabia, the cartel's most powerful member, faces a delicate task: preventing further defections while managing a market it can no longer control. The kingdom may offer more flexible production quotas or reduce penalties for members who exceed their targets. But as Hansen noted, the compensation framework that once held the cartel together has become largely irrelevant when production is being shut in across the region anyway. The Iran war has stripped OPEC+ of its leverage at precisely the moment when the world needs oil supplies to stabilize.
One factor is currently restraining prices from climbing even higher: China, the world's largest oil consumer, is buying less crude than usual, drawing instead on its vast strategic reserves. But that cushion will not last forever. As long as the Strait of Hormuz remains effectively closed and OPEC+ remains fractured, the cartel's ability to shape global oil markets has been reduced to almost nothing.
Citações Notáveis
Any announced production increases or changes to output targets will have limited practical value.— Ole Hansen, commodities analyst at Saxo Bank
If Iraq were to leave, it could mark the end of OPEC+.— Homayoun Falakshahi, head of crude oil analysis at Kpler
A Conversa do Hearth Outra perspectiva sobre a história
If OPEC+ can only increase production by 188,000 barrels a day, why does that matter so little when 20 million barrels a day are being blocked?
Because the blockade isn't a temporary shortage they can offset. It's a structural collapse of supply from the Gulf itself. Adding barrels from Saudi Arabia or Russia doesn't replace crude that can't physically leave the region.
So the cartel is being asked to solve a geopolitical problem with economics?
Exactly. OPEC+ was built to manage supply and demand through production decisions. But when the Strait is closed, production decisions become almost irrelevant. The constraint isn't what they choose to pump—it's what can actually reach the market.
Why would the UAE leave now, when oil prices are so high? Shouldn't that be when they make the most money?
That's the paradox. High prices are good for revenue, but only if you can sell. The UAE wants to pump more and sell more, but OPEC+ quotas prevent that. By leaving, they can maximize output without cartel restrictions, even if the Strait closure limits where they can ship it.
Is Saudi Arabia in danger of losing control of OPEC+?
Saudi Arabia is in danger of watching the organization dissolve. If Iraq leaves after the UAE, there's no cartel left to control. So Riyadh has to make the rules flexible enough to keep members from walking, even though flexibility undermines the whole point of having quotas.
What happens when China stops using its strategic reserves?
That's the cliff edge. Right now China is the only thing keeping prices from spiking even higher. Once those reserves run down, there's nothing between the market and the full weight of a 20-million-barrel-a-day shortage. And OPEC+ won't be able to fill that gap.