OPEC has sufficient spare oil capacity to offset a complete loss of Iranian oil supplies if Israel targets Iranian facilities. However, the group may struggle to manage the situation if Iran retaliates against other Gulf nations’ installations. Recent tensions escalated when Iran launched missile strikes against Israel in response to Israeli airstrikes, prompting concerns about potential broader disruptions to oil supply.
Iran, an OPEC member, produces approximately 3.2 million barrels per day (bpd), accounting for about 3% of global output. Despite U.S. sanctions, Iranian oil exports have surged to nearly 1.7 million bpd this year, primarily driven by demand from Chinese refiners, who do not recognize U.S. sanctions.
Analysts suggest that while OPEC+ has enough spare capacity to theoretically compensate for the loss of Iranian production, much of this capacity is in the vulnerable Gulf region. Current OPEC+ production cuts total 5.86 million bpd, with Saudi Arabia and the UAE capable of increasing output significantly if needed.
During a recent meeting, OPEC+ did not address the Israeli-Iranian conflict directly but expressed hopes for non-escalation. The potential for Iran to target energy operations in the region, similar to past conflicts, raises concerns about broader supply disruptions.
Oil prices have remained relatively stable, ranging between $70 and $90 per barrel, partly due to increased U.S. production, which helps mitigate supply shocks. However, a significant escalation in the Middle East could lead to price hikes, impacting fuel costs and potentially affecting political dynamics in the U.S., particularly for Vice President Kamala Harris in the upcoming election against Donald Trump.