OPEC+ warns of costs to repair energy assets in the Middle East

Eight countries that form the core of the OPEC+ group of oil producers have expressed concern over Iran’s attacks on energy infrastructure as oil shortages persist amid the Middle East war.

“Restoring damaged energy resources to full capacity is costly and time-consuming, thus affecting overall supply availability,” the countries said in a joint statement after an online meeting.

They also stressed “the critical importance of safeguarding international sea lanes to ensure the uninterrupted flow of energy” – a reference to the Strait of Hormuz, which Iran has effectively blocked in reaction to Israeli-American attacks.

The group – made up of Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman – said it would increase oil production in May by 206,000 barrels a day.

Given the blockade of the Strait of Hormuz, through which about 20% of global oil trade passes, the move is more symbolic than practical, as the oil market faces a supply problem rather than a production shortage.

According to Carsten Fritsch, an analyst at Germany’s Commerzbank, a large part of the available oil supply is currently destined for Asia, namely China, Japan and South Korea.

“Asia is currently sucking everything up like a vacuum cleaner,” he said.

US President Donald Trump has urged countries facing shortages to source oil from the United States.

However, the impact of this on global prices remains uncertain, as they are determined by global supply, which has been limited due to the war.

Countries in the Gulf region have cut their daily oil production by at least 10 million barrels, or nearly 10% of global demand, citing limited oil storage capacity that cannot pass through the Strait of Hormuz, according to International Energy Agency data from March.