Global oil markets faced renewed volatility Sunday after OPEC+ announced a larger-than-expected production increase, while tensions flared around the strategically vital Strait of Hormuz.
The producer alliance, of which Iran is a founding member, agreed to raise its production quota by 220,000 barrels per day.
The adjustment exceeded market expectations of a 137,000 bpd increase and comes at a time when geopolitical risk is already influencing energy prices.
Investor attention has shifted sharply to the Strait of Hormuz. Roughly 20 per cent of global oil supply and a similar share of liquefied natural gas shipments pass through the narrow waterway each day.
According to Reuters, vessels operating in the area were instructed Saturday by Islamic Revolutionary Guard Corps that "no ship is allowed to pass the Strait of Hormuz."
Iran exerts significant strategic influence over the waterway, which links the Persian Gulf to global markets. Although Tehran has previously threatened to close the Strait, it has never fully done so.
Several analysts told Yahoo Finance that a complete closure would be effectively impossible given the presence of international naval forces and the logistical challenges involved.
In the minutes following a reported U.S. attack, several oil majors and major trading houses suspended oil and fuel shipments through the Strait, underscoring the market's sensitivity to escalating tensions.
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