OPEC+'s Grip on Oil Market Slips Amid Iran Conflict and Shifting Demand from China

OPEC+, once the dominant force in the global oil market, has seen its influence wane significantly amid the ongoing conflict with Iran. Six months into the war, the alliance's ability to steer prices and manage supply has been severely impaired due to wartime disruptions and shifting demand from China.

According to Reuters calculations based on International Energy Agency data, OPEC+ accounted for about 40% of global oil output in July, down from over 48% before the US and Israel attacked Iran in late February. The core group of seven producers, including Saudi Arabia and Russia, accounted for only a quarter of world output in July.

The conflict has effectively blocked the Strait of Hormuz, limiting OPEC+'s ability to quickly raise or cut supply to offset losses elsewhere. Since March, OPEC+ has announced six oil output increases, but most have remained largely on paper due to the blockade, with little effect on prices.

China's decline in crude imports has been a significant price driver this year. Since the war began, China has bought roughly 400 million fewer barrels of oil than during the same period last year, reflecting a ban on fuel exports, lower refining output, and the growing use of electric transport.