Seven members of OPEC+ just announced they're increasing output quotas by 600,000 barrels per day from April to June. This follows the Strait of Hormuz closure. The strait that handles about 21 million barrels per day of global oil transit.
Math time. The closure eliminated 21 million barrels per day from the market. OPEC+ countered with 600,000.
That's 2.8 percent of what was lost.
Russia and its allied producers gathered in a room somewhere. They surveyed the largest oil supply disruption in modern history. They crunched the numbers. They debated. They emerged with a solution that replaces less than three percent of the missing supply.
It's like watching your house burn down and your neighbor showing up with a Super Soaker.
The seven countries involved must have sat through hours of negotiations. Energy ministers flew in from different continents. Translators stood by. Legal teams drafted documents. Security details coordinated. All to announce that they'd contribute roughly the equivalent of what Libya was producing on a good Tuesday in 2019.
Retail traders saw this headline and immediately started calculating their crude oil position sizes. They're convinced this 600,000 barrel increase is the key variable. They're building models. They're drawing trendlines on charts. They're posting in Discord channels about how this changes everything.
It doesn't.
The Strait of Hormuz is closed. That's the story. Everything else is theater. OPEC+ could announce they're doubling output tomorrow and it wouldn't matter because the choke point is geography, not willingness to pump.
But sure, 600,000 barrels will fix it. That'll plug the 21-million-barrel hole. Like using a Post-it note to patch the Titanic.
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