OPEC+ has agreed to increase production by 188,000 barrels per day in June, but this may just be a "paper number".

OPEC+ has approved a third consecutive increase in production quotas, but this decision will have almost no impact on actual supply until the blockade in the Strait of Hormuz is lifted. According to Reuters on May 3, seven OPEC+ member countries have tentatively agreed to raise their June production targets by about 188,000 barrels per day, and this decision was officially confirmed today. Meanwhile, the UAE has officially withdrawn from OPEC+ this week, and its share has been removed from this production increase plan. Due to the impact of the blockade in the Strait of Hormuz caused by the US-Iran conflict, oil prices surged to over $125 per barrel this week, hitting a four-year high. Analysts are warning of a widespread shortage of global aviation fuel within one to two months, and warning of a new round of global inflation shocks. In this context, the statement on production increase by OPEC+ is seen more as a policy gesture rather than a substantive relief for supply tightness by the market. The seven countries will hold another meeting on June 7, and the direction of the situation will be the focus of the market's attention. Oil executives from the Gulf region and global oil traders have said that this production increase decision will remain largely on paper until the Strait of Hormuz is reopened, and even if the strait resumes navigation, it will take weeks or even months for oil flows to normalize. The decision to increase production is like a mere formality, with war as the core variable. The meeting was attended by seven countries: Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia, and Oman. According to Reuters, the 188,000 barrels per day increase is equivalent to the remaining amount after deducting the UAE's share from the 206,000 barrels per day increase last month. The key issue is that among the seven countries, Saudi Arabia, Iraq, and Kuwait were the only countries within OPEC+ that actually had the capacity to increase production before the conflict broke out, and the export channels of these three countries are currently blocked due to the blockade in the Strait of Hormuz. Insiders say that the decision to increase production is intended to send a signal to the market - OPEC+ is ready to increase supply as soon as the war ends. An OPEC report released last month showed that the average crude oil production of all member countries in March was 35.06 million barrels per day, a sharp drop of 0.77 million barrels per day from February, with Iraq and Saudi Arabia experiencing the largest declines due to export constraints. Meanwhile, it is reported that the UAE officially exited OPEC+ on May 1, and its quota share has been removed from this production increase plan. After the UAE's departure, the total number of OPEC+ member countries has dropped to 21, including Iran, but in recent years, the actual countries involved in the monthly production decisions are only the aforementioned seven countries plus the UAE. Although Iran is a member of OPEC+, it did not participate in Sunday's meeting. According to Reuters, Iran's own exports have been significantly restricted due to US sanctions implemented in April. Insiders say that OPEC+ is sending a signal of "business as usual" with this move, indicating that the organization is willing to increase supply after the war ends, while also maintaining the established pace of production increases in the background of the UAE's withdrawal. This article is reprinted from "Wall Street Vision," edited by GMTEight: Feng Qiuyi.