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OPEC+ set to stick to modest oil output increase amid price rally

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Oil producer group OPEC+ is likely stick to its plan for modest output increases on Thursday, arguing it is not responsible for geopolitics and supply disruptions while emphasising concerns over the demand outlook
after new COVID lockdowns in China.

Five OPEC+ delegates said the group is set to agree another monthly increase of 432,000 barrels per day in its production target for June, in line with a plan to unwind output curbs made during the worst of the COVID-19 pandemic in 2020.

OPEC+ includes the Organization of Petroleum Exporting Countries and allies including Russia.

The meeting comes against the backdrop of surging oil prices that hit their highest since 2008 at more than $139 a barrel in March after Russia’s invasion of Ukraine exacerbated supply concerns that were already fuelling a price rally.

“I do not think a new decision will be made,” one of the delegates said. Another said it was “highly expected” that the meeting will be short and stick to the plan.

The OPEC+ meeting also comes a day after the European Union proposed a phased oil embargo on Russia in its toughest measures yet over the war in Ukraine, which Moscow calls a “special military operation”.

OPEC Secretary General Mohammad Barkindo on Wednesday said it is not possible for other producers to replace Russian exports of more than 7 million bpd. “The spare capacity just does not exist,” he said.

The Brent crude oil benchmark rose on Thursday to trade above $111.

OPEC now expects 2022 world oil demand to expand by 3.67 million bpd in 2022, down 480,000 bpd from its previous forecast, with Barkindo saying that the latest Chinese lockdowns are curbing demand.

The United States has repeatedly asked OPEC to raise production, but the Saudi-led organisation has resisted the calls amid strained relations with Washington.

The West’s energy watchdog, the International Energy Agency, agreed last month to release record volumes of oil stocks to help to cool prices and offset supply disruptions from Russia.
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