OPEC+ loses oil market sway in Iran war as China gains influence

With the Iran war now in its sixth month, Business Recorder reports, citing Reuters, that OPEC+ struggles to shape oil prices, and its announcements barely move the market. The group's share of global crude output stood at about 40% in July, down from above 48% before the US and Israeli strikes on Iran in late February. Roughly four to five percentage points of that decline came from the United Arab Emirates leaving OPEC in May.

The war has effectively blocked the Strait of Hormuz, a major export route for Saudi Arabia, Iraq and Kuwait, limiting how rapidly OPEC+ can change its output. Six output increases announced since March have mostly stayed on paper, with little price effect except during a brief ceasefire between the US and Iran in July. The current disruption is unusual because its scale is constraining several producers at once.

China's crude purchases since the war began have fallen by roughly 400 million barrels compared with the same stretch last year. The decline reflects a fuel export ban, lower refining output and growing use of electric transport, and it has helped cap prices this year. Sparta Commodities analyst June Goh said China has become the swing demand centre.