OPEC+ poised to approve third oil output quota increase since Hormuz closure: Sources

• OPEC+ convenes Sunday with a preliminary agreement in place, sources say
• OPEC+ plans to boost June output quotas by 188,000 bpd, draft says
• Most members unable to hit targets due to Strait of Hormuz shutdown
• Quota hike to exclude UAE share after its exit from OPEC and OPEC+, sources say

OPEC+ is poised to agree on a modest oil output increase during its meeting on Sunday, according to sources and a draft statement.

However, analysts and industry insiders warn the hike will remain largely on paper so long as the US-Iran war continues to block the Strait of Hormuz.

Seven key OPEC+ members -Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia, and Oman- have reached an agreement in principle to raise June output quotas by 188,000 barrels per day (bpd).

This marks the third consecutive monthly increase as the group attempts to signal its readiness to restore global supply.

Gesture amid blockade

While the quota increase aims to reassure markets, the reality on the ground remains dictated by the military conflict that began on February 28.

The closure of the Strait of Hormuz has effectively throttled exports from the group's heaviest hitters, including Saudi Arabia, Iraq, and Kuwait.

Before the conflict, these nations were the only members with the spare capacity to significantly increase production. Now, with shipping lanes impassable, current production levels are dictated by physics and logistics rather than policy.

"The output hike will remain largely symbolic until shipping through the Strait of Hormuz reopens," said one Gulf oil executive. "Even then, it will take several weeks, if not months, for flows to normalize."

Market turmoil and UAE departure

The meeting comes during a week of significant structural shifts for the organization. The United Arab Emirates (UAE) officially exited both OPEC and the wider OPEC+ alliance this week.

Sources indicate that the new June quotas have already been adjusted to remove the UAE’s previous share.

The continued disruption has propelled oil prices to a four-year high, surging above $125 per barrel. Global markets are bracing for a spike in inflation, with some analysts predicting widespread jet fuel shortages within the next 60 days if the blockade persists.

Production freefall

The scale of the supply crunch was highlighted in a recent OPEC report, which noted that total crude output from the alliance averaged 35.06 million bpd in March, a staggering drop of 7.70 million bpd from February.

Saudi Arabia and Iraq accounted for the bulk of these involuntary cuts as their export terminals stood idle.

By pressing ahead with a quota increase, OPEC+ appears to be maintaining its administrative framework in anticipation of a post-war environment.

The draft statement suggests the seven core members will meet again on June 7 to re-evaluate the theater requirements.

The subsequent Iranian response have transformed the energy market into a geopolitical battlefield, leaving OPEC+ with few tools beyond symbolic gestures until the diplomatic or military stalemate in the Persian Gulf is resolved.