OPEC+ Loses Grip on Oil Market Amid Iran War Chaos

The Iran war has significantly impacted the oil market, reducing OPEC+'s influence and ability to affect prices.

In July, OPEC+ accounted for about 40% of global oil output, down from over 48% before the US and Israel attacked Iran in late February. Four to five percentage points of this decline were due to the United Arab Emirates' withdrawal from OPEC in May.

OPEC+'s core group of seven producers, including Saudi Arabia and Russia, accounted for only a quarter of world oil output in July. The war has effectively shut the Strait of Hormuz, a key export route for top OPEC producer Saudi Arabia and other members such as Iraq and Kuwait.

The reduced ability to quickly raise or cut supply has been exacerbated by wartime supply disruptions, which are not new for OPEC but are now on an unprecedented scale. Since March, the core OPEC+ group has announced six oil output increases, yet most have remained largely on paper due to the Hormuz blockade.