VIENNA: Saudi Arabia, Russia and other key oil producers agreed on Thursday on another marginal increase in output, bolstered by risks to demand amid coronavirus restrictions in China.
Russia’s invasion of Ukraine has added to supply concerns, which have increased with Europe’s announced moves on a potential Russian oil embargo.
Opec+ members confirmed they’ll stick to their strategy of modestly boosting output, adding another 432,000 barrels per day for June.
In short back-to-back meetings via video conference, the group “noted the continuing effects of geopolitical factors and issues related to the ongoing pandemic”, it said in a press release.
Prices had soared on Wednesday, with the Brent North Sea contract closing above $110 a barrel, its highest level in two-and-a-half weeks.
At around 1400 GMT on Thursday, Brent stood at $113.25 a barrel and American WTI at $110.64 a barrel.
Analysts had widely expected the Organisation of Petroleum Exporting Countries (Opec), led by Riyadh, and their 10 partners led by Moscow to stay the course.
“In any case, the decision by OPEC+ to raise its output quota in June is only as relevant as its ability to meet that quota. In recent months, it has failed to do so,” Edward Gardner, a commodities economist for Capital Economics, said.
Between a lack of investment in oil infrastructure in some member countries and operational problems, the cartel regularly fails to meet its production quotas.
Published in Dawn, May 6th, 2022
