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Informist, Wednesday, May 6, 2026

 

By Abhijit Doshi

 

MUMBAI – The increase in crude oil output that the Organization of the Petroleum Exporting Countries announced Sunday surprised nobody. After the United Arab Emirates exited the group Friday, OPEC's collective output fell, following which the grouping announced a rise of 188,000 tonnes in June by the seven countries that remain. Since exports of crude oil from the Persian Gulf region are currently blocked because of the closure of the Strait of Hormuz, higher production is only academic.

 

"OPEC+ (OPEC and its allies) has agreed to a modest, largely symbolic oil output increase for June as the United States-Israel war on Iran disrupts Gulf supplies through the Strait of Hormuz," Al Jazeera said in a report Sunday.

 

"As export routes for the Gulf region are largely blocked and production by the Gulf states likely had to be further curtailed in April (estimates are still pending), the announcement is pro forma, but at least signals that the remaining members continue to stand together," Commerzbank Research said in a release Monday.

 

Russia, a member of the cartel, is also facing export problems, Commerzbank said. According to an assessment by the Kremlin-linked Centre for Macroeconomic Analysis and Short-Term Forecasting, around 1 million barrels of export capacity were lost following drone attacks by Ukraine on Russia's oil infrastructure in April; refinery throughput was the lowest since 2009 due to the attacks.

 

On the other hand, Kazakhstan was able to further increase its output in April. Production of oil and condensates rose by 300,000 barrels in April compared with the previous month, reaching just under 2.2 million barrels per day, according to Reuters. Crude oil production in the Central Asian country stood at 1.9 million barrels per day, a good 350,000 barrels per day more than its allotted quota, but far short of offsetting the production losses of the others.

 

Exports from other producing countries are also rising. Venezuela's oil exports climbed to 1.23 million barrels per day in April, 150,000 barrels per day more than in the previous month, and the highest level since the US imposed sanctions on Venezuela's energy industry at the end of 2018. "Following (President Nicolas) Maduro's removal from power, the US has permitted controlled trade. Almost 450,000 barrels per day went to the main buyer, the US; but exports to India also rose slightly (to 374,000 barrels per day) and to Europe (to 165,000 barrels per day)," Commerzbank said in its release.

 

Interestingly, data from global trade analytics firm Kpler show that the US also managed to increase its oil exports in April to a new record high of 5.2 million barrels per day; in March, the figure had been just 3.9 million barrels per day. "At the Texan oil port of Corpus Christi, the third-largest in the world, for example, 240 tankers were recorded in March; whereas the usual monthly figure is only 200."

 

However, the US is gradually drawing on its strategic reserves. According to the Energy Information Administration, the US released around 17.5 million barrels of crude oil from its strategic reserves between Mar. 20 and Apr. 24, amounting to around 10% of the total release announced in March, Commerzbank Research noted.

 

After the UAE's departure, the major oil producers that are now part of OPEC and allies are Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman. At Sunday's meeting, they reaffirmed the importance of adopting a cautious approach and retaining full flexibility to increase, pause, or reverse the phasing out of voluntary production adjustments, including reversing the previously implemented voluntary adjustments announced in November 2023. They also confirmed their intention to fully compensate for any overproduced volume since January 2024. The seven countries will meet again on Jun. 7. 

 

OPEC's announcement was largely in line with expectations, with the crude oil market continuing its roller-coaster ride, going yo-yo on developments in the US-Iran war. At 1710 IST, the Brent July futures contract on the Intercontinental Exchange was at $98.10 per barrel, down 11.4% from the previous close. The West Texas Intermediate contract on NYMEX was down 11% at $90.87 a barrel. Both had only recently made new highs.  End

 

US$1 = INR 94.61

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Rajeev Pai

 

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