Iran War Saps OPEC+ Control Over Oil Markets

Oil markets have taken a significant hit as a result of the ongoing Iran war. OPEC+, once considered the world's most powerful oil alliance, has lost its grip on market control six months into the conflict.

The war has severely impacted key Middle East export routes and damaged energy infrastructure in several member countries, leading to a sharp decline in OPEC+'s market share. Its statements and policy decisions now have little effect on oil prices.

OPEC+ accounted for approximately 40% of global oil output in July, down from over 48% before the US and Israel struck Iran in February, according to Reuters calculations based on IEA data. The group's core seven producers, including Saudi Arabia and Russia, now account for just a quarter of world output due to the near-closure of the Strait of Hormuz.

The shift in market control has led to China becoming the swing demand centre, as falling Chinese oil imports have become one of the year's biggest price drivers. Since the war began, China has bought roughly 400 million fewer barrels than the same period last year, partly due to a fuel export ban and reduced refining.