OPEC countries cut output as demand slows due to Hormuz blockade

Overall production among OPEC members has fallen by more than 30%, or 9.7 million barrels per day, since the war started.

Before the Iran war, the Strait of Hormuz saw ships carrying about 20 million barrels of crude oil and petroleum products daily.

The key waterway remains effectively closed to commercial shipping due to competing blockades from the United States and Iran.

Despite the closed strait and the unresolved war, OPEC+ has agreed to proceed with a “symbolic” production quota increase of 188,000 barrels per day for June. The measure shows nations are attempting to continue business amid global tensions regarding the war.

OPEC’s optimistic demand growth forecast for next year is 1.54 million barrels per day, an increase from its previous estimate of 1.34 million barrels per day.

The United Arab Emirates recently withdrew from OPEC to distance itself from Saudi Arabia, which leads the group. The UAE’s exit took effect on May 1, but the Gulf nation was still included in the April output numbers.

The UAE was OPEC’s third-largest oil producer last month, so its departure delivers a notable blow to the international alliance. The country aims to increase its output to 5 million barrels per day by 2027. Under OPEC, the UAE previously had a limit of about 3.5 million barrels per day.