© Archyde.com. OPEC+ sticks to planned small output increase despite EU demands for big output increase
Financial Associated Press, May 6 (Editor Zhao Hao) Recently, the European Union is considering banning the import of Russian oil, making the global market more tight. But even so, OPEC+ again approved a small increase in monthly output.
According to a statement issued by OPEC on Thursday (May 5), the participating oil-producing countries reconfirmed the production adjustment plan and monthly production adjustment mechanism approved at the 19th ministerial meeting, and raised the monthly total output in June by an average of 432,000 barrels per day. .
According to the statement, the participating oil-producing countries believe that the crude oil market is still affected by geopolitical factors and the new crown epidemic, but the current market fundamentals and the consensus on the future direction show that the market supply and demand are balanced.
Oil-producing ministers sidestepped the issue of sanctions on Russia altogether, ending talks in a near-record 15 minutes, two delegates said.
That means they have all but ignored Western calls for faster production increases. On Wednesday, the European Commission proposed the latest sanctions against Russia, including a six-month phased halt to crude oil imports from Russia.
The EU has repeatedly hoped that OPEC will fill the gap in Russian oil, but with OPEC insisting on a small increase in production, they have to compete with Asian buyers for these limited production. OPEC Secretary-General Barkindo said on Wednesday that other producers could not replace Russia’s exports of more than 7 million bpd.
In addition to the EU competing with Asian buyers for production capacity, the United States also plans to seek to buy 60 million barrels of crude oil this fall to replenish the US Strategic Petroleum Reserve (SPR). The Biden administration pledged in March to release a record 180 million barrels of oil in six months, and the SPR is already at a 20-year low.
Investec analyst Callum Macpherson commented, “OPEC sees this as a problem of its own making, not a supply problem it should be dealing with.”
In July 2021, OPEC+ reached an agreement at its 19th ministerial meeting, agreeing to increase its total output by an average of 400,000 barrels per day from August of that year until the 5.8 million barrels per day reduction is phased out.
Bill Farren-Price, director of Enverus Intelligence Research, said ahead of Thursday’s meeting, “OPEC’s steady increase in production since mid-2021 appears to have lost steam, with supply risks rising as sanctions on Russia mount, and the group’s efforts to stabilize oil prices. The ability is disappearing.”