Oil increase amid US-Iran war fears

28/02/2026

The different kinds of threats of war in the Arabian Gulf region, with USA threats of attacks on Iran, are causing oil markets to jump and oil prices to become unstable with no clear direction. It seems oil does not remain at a stable level. Even though oil stocks and tanks are full, the oil markets still do not stay stable. About ten days ago, oil markets were quiet and stable, with oil prices below $70 a barrel. Now, prices have jumped to $73 and may go higher, triggered by a simple threat from the USA of possible military actions against Iran.

Oil producers are maximizing their production. Saudi Arabia has pushed its production to above 7.3 million barrels per day, while the Emirates increased its crude oil production to 3.5 million barrels per day, reaching its highest production level. This may be a signal to the world of its new high output. This new level of crude oil prices provides additional income over the previous level of $68 per barrel. However, once the threats of war begin to calm down, oil prices are expected to return to their previous stable level below $70 a barrel. The recent increase in oil production also indicates that two OPEC countries, mainly Saudi Arabia and Abu Dhabi, have the capability to raise their crude oil output within a short time.

This makes the oil market more comfortable, as it can anticipate that these countries can provide additional volumes of oil on short notice. With the OPEC+ meeting today to discuss the oil markets, current situations, and evaluate future trends, it appears the organization will pause further production increases. This follows the November 2025 decision to hold back supply during the first quarter of 2026. There is a likelihood of a token increase of 130,000 barrels per day starting in April. The group will also consider the potential impact of U.S. threats of war against Iran, with most Gulf states remaining reluctant and unsupportive of such action. They appear firm in their rejection of any act of war.

The other delicate issue that OPEC always faces is the overproduction by some of its members who do not fully adhere to their quotas, which happens frequently. There is no effective mechanism to enforce production limits. Most members keep the issue on the agenda, but without strict enforcement. This allows oil prices to remain relatively stable and acceptable to members.

Overall, price levels are under control, and members are reluctantly satisfied, with no other choice. Even though they may be facing deficits in their income and annual budgets, this is the best OPEC+ can hope for at present, leaving the energy markets to do its own magic with oil prices. OPEC+ is doing what it can, leaving the rest to the markets and speculators.

By Kamel Al-Harami
Independent Oil Analyst
Email: [email protected]