OPEC+ has officially approved a third consecutive monthly oil output increase during its May online meeting, with seven core members backing a plan to lift group production targets by 188,000 barrels per day in June. According to multiple reports, this decision represents the group's first meeting since the UAE's exit from OPEC+ on May 1, 2026. The seven states involved in the discussion are Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia and Oman, following the United Arab Emirates' departure from the alliance. As per Rystad analyst Jorge Leon, OPEC+ is sending a two-layer message to the market: continuity despite the UAE's exit, and control despite limited physical impact. The latest increase equals that agreed for this month, minus the UAE's share, signalling the cartel's readiness to boost supplies once the conflict ends.
The war involving Iran, which started on February 28, has led to the closure of the Strait of Hormuz, restricting shipments from Saudi Arabia, Iraq and Kuwait, as well as from the United Arab Emirates. As reported by multiple sources, Gulf oil executives and international traders say the planned OPEC+ oil output hike is largely symbolic while Hormuz remains shut. Even after ships resume normal passage, they expect it could take several weeks, or even months, before export volumes return to levels seen before February 28. The Iran war ceasefire remains in place, but Gulf oil supplies are still prevented from passing through the Strait. OPEC reported that combined crude production from all OPEC+ countries averaged 35.06 million barrels per day in March, a fall of 7.70 million barrels per day from February, with Iraq and Saudi Arabia delivering the largest reductions due to constrained exports.
The ongoing Iran war has triggered a significant response from major U.S. oil producers, with Diamondback Energy becoming the largest U.S. oil producer to increase spending and drilling activities. According to Diamondback CEO Kaes Van't Hof, the company is adding both fracking crews and drilling rigs to West Texas as the light has turned green for the U.S. energy sector. The U.S. benchmark oil price reached $105 per barrel on May 4, representing an 85% increase since the beginning of the year. Diamondback reported that its Permian oil production averaged 521,000 barrels per day in the first quarter, exceeding even its high-point guidance of 512,000 barrels per day. The company plans to maintain production of 520,000 barrels per day or more through the rest of the year, with its midpoint guidance previously set at 505,000 barrels per day.
The disruption has lifted oil prices to a four-year peak above $125 per barrel this week, with recent developments showing continued volatility. According to Reuters, Brent crude futures were up $2.05, or 1.9%, at $110.22 a barrel by 1307 GMT, having hit a session high of $114.30, while U.S. West Texas Intermediate was up 47 cents, or 0.5%, at $102.41 a barrel after rising to as high as $107.46 earlier on Monday. The UAE on Monday accused Iran of attacking an empty crude oil tanker belonging to the Abu Dhabi state oil firm ADNOC with drones as it attempted to pass through the strait. Iran earlier said it had prevented a U.S. warship from entering the Gulf, with Iran's military warning U.S. forces not to enter the strait, saying it would 'respond harshly' to any threat. President Donald Trump said the U.S. would begin efforts to assist ships stranded in the strait, but prices stayed above $100 a barrel, with no peace deal in sight and shipping through the strategic waterway still constrained.
