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

Six months into the Iran conflict, the world's most influential oil coalition, OPEC+, finds itself powerless to sway a market it once dominated. The ongoing war has disrupted oil exports from Middle Eastern nations and hampered energy infrastructure in several OPEC countries, causing OPEC+ to lose market share and influence prices.

Their statements and policy decisions no longer sway oil markets, as the group's dominance has eroded. Instead, a shift in Chinese crude imports has become the primary force shaping 2026 oil markets, helping to stabilize prices in the face of an unprecedented supply disruption caused by the war. OPEC+ once commanded about 40% of global oil output in July, down from over 48% before the US and Israel targeted Iran in late February.

However, the UAE's departure from OPEC in May contributed to a quarter of the decline in global output. The core group of seven OPEC+ producers, including Saudi Arabia and Russia, accounted for only a quarter of world oil output in July. The war has limited OPEC+’s capacity to swiftly adjust supply by effectively closing the Strait of Hormuz, a vital export route for key OPEC producers like Saudi Arabia, Iraq, and Kuwait.

OPEC was established in 1960, with the OPEC+ framework expanded in 2016 to include Russia and other nations. At its peak in the 1970s oil crises, OPEC+ accounted for 50% of global crude output, dropping to 30% by the 1980s as other regions expanded production. The group does not disclose its decisions to Reuters. OPEC+ attributes its actions to market stability, without targeting specific oil prices.

The scale of the current outage is unique, as it affects multiple producers at once, reducing OPEC+'s ability to offset losses in other areas. Since March, the core OPEC+ group has announced six output increases, but most have had little impact on oil prices due to the Hormuz blockade. The situation starkly contrasts with 2019, when OPEC+ and US President Donald Trump regularly disagreed over oil prices, with OPEC+ decisions closely monitored by traders for market effects.

Then, the key question was how much oil OPEC+ would pump. Now, the focus is on how much oil can actually be produced and exported amidst the Middle East conflict. A significant factor this year has been the dramatic drop in Chinese oil imports, with China purchasing about 400 million fewer barrels than the same period last year.

The decline is due to a fuel export ban, reduced refining output, and the increasing use of electric vehicles. This trend underscores China's growing role in balancing oil markets, a position once held almost exclusively by OPEC+.