OPEC output plunges by 1.7 million bpd as Hormuz crisis deepens

OPEC’s crude output collapsed by more than 1.7 million barrels per day in April as the escalating Iran conflict paralyzed the Strait of Hormuz, sending Brent crude above $107 a barrel and raising the risk of a global recession.

“OPEC+ crude supply declined by 830 kb/d in April to 34.1 mb/d as OPEC Gulf production fell a further 900 kb/d month-on-month with the continued closure of the Strait of Hormuz necessitating additional curtailments,” the International Energy Agency said in its latest monthly report.

The production collapse left the wider OPEC+ alliance pumping 9.9 million barrels per day below its April target, according to OPEC's own monthly report. The supply shock sent Brent crude surging past $107 a barrel, while West Texas Intermediate crude climbed above $102, fueling inflation fears and a selloff in equity markets.

The historic disruption, which has effectively removed millions of barrels of high-quality sour crude from the market, is forcing a dramatic reassessment of global energy security. The IEA, which just one month ago projected a surplus, now expects supply to fall 1.78 million barrels per day short of demand in 2026, increasing pressure on the agency to coordinate further releases from strategic petroleum reserves.

Saudi Production Hits 36-Year Low

The heart of the production shortfall lies with Saudi Arabia, the group’s largest producer. The kingdom officially reported to OPEC that its crude output fell to just 6.32 million barrels per day in April, a staggering 651,000 barrel-per-day drop from March. The figure marks the lowest level of Saudi production since the 1990 Gulf War, highlighting the severity of the export bottleneck.

According to secondary sources cited in OPEC’s report, the group’s total output fell by 1.73 million bpd to 18.98 million bpd. The report detailed massive shortfalls relative to agreed-upon quotas across the Gulf, with Iraq producing 2.91 million bpd below its plan and a then-member UAE falling 1.41 million bpd short. The United Arab Emirates officially left OPEC on May 1, citing long-standing disagreements over production quotas.

The Strait of Hormuz, the chokepoint for about a fifth of the world's sea-borne oil trade, has been effectively closed by the conflict, stranding tankers and forcing producers to slash output. While the UAE has some capacity to export via pipelines that bypass the strait, its capabilities are insufficient to offset the broader regional collapse.

IEA and OPEC Diverge on Demand Outlook

As the supply shock intensifies, major forecasting agencies are split on the outlook for demand. OPEC on Wednesday lowered its forecast for 2026 global oil demand growth to 1.2 million barrels per day, a reduction of 200,000 bpd from its previous estimate. However, the producer group remains more optimistic than others, raising its demand growth forecast for 2027.

In sharp contrast, the IEA now projects that the price spike and economic fallout from the Hormuz crisis will cause global oil demand to shrink this year. The Paris-based agency warned the widening supply deficit is rapidly transforming global oil markets, reversing its earlier forecast of a 2026 surplus.

The crisis exposes the limits of OPEC+’s ability to manage the market. While the group had agreed to production increases, the physical inability of key members to export oil renders the quotas largely symbolic. The alliance now faces a paradox of officially higher targets clashing with a real-world production collapse, a situation that analysts say will keep upward pressure on prices and deepen economic uncertainty worldwide.

This article is for informational purposes only and does not constitute investment advice.