Oil-producing nations are preparing to increase crude output in an effort to prevent prices from surging amid escalating tensions in the Middle East.
OPEC is scheduled to meet on Sunday and had already been expected to raise production by 137,000 barrels per day. However, the conflict involving Iran could prompt the cartel to consider a significantly larger increase, as markets brace for the possibility that crude could spike toward $100 per barrel when trading resumes Sunday night, up from around $73 on Friday.
Even if additional supply is agreed, logistical challenges remain. Getting the oil into tankers and shipped to market may prove difficult.
Saudi Arabia is one of the few producers with meaningful spare capacity. Yet much of its crude exports pass through the Strait of Hormuz — a critical chokepoint that Iran could seek to disrupt. Tanker traffic through the strait has already thinned in recent days.
Until recently, OPEC had been restraining output over concerns that oversupply would drive prices to uneconomic levels. Instead, crude has risen nearly 20% this year, as traders and buyers priced in the growing risk of a US-Israeli strike on Iran.
