Crude oil prices have risen as Iran and Israel trade attacks, but not as much as you might expect. One reason? OPEC+ could pump a lot more oil if it wanted to.
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Although tensions between Israel and Iran are currently as serious as they have been for decades, said Sen, “the market has been completely brushing it aside.”Why are markets so sanguine? The biggest reason, analysts say, is that the OPEC+ alliance could make a lot more oil — if it wanted.oil, which funds their national budgets. Balancing those two competing motivations is the central diplomatic challenge of the cartel.
Rystad Energy, an energy research company, estimates that Iran produces about 4 million barrels of crude per day, and exports about 2 million. OPEC+’s spare capacity – the amount of oil the group could make, but is choosing not to – “currently sits at more than 5 million barrels per day, which could be deployed relatively quickly,” Claudio Galimberti, the chief economist of Rystad Energy, wrote in a research note.
More than a quarter of the world’s seaborne crude travels through that waterway, which lies between Iran and the United Arab Emirates. Any blockage would cause “runaway” oil prices, Galimberti of Rystad Energy says.
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