OPEC and its allies approved another modest oil production increase March 31, saying it saw no need to respond to oil disruptions from the Ukraine war being waged by key member Russia, despite pressure from major consuming economies for more supplies.
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The OPEC+ agreement calls on the 23-country producer alliance to boost output by 432,000 b/d in May.
That is a slight increase from the previous monthly increases of 400,000 b/d, with a slight readjustment of quotas, but still far short of what analysts at S&P Global Commodities Insights forecast could be 2.8 million b/d of Russian crude shut-ins from late April through to the end of 2022.
In a communique after a speedy 12-minute meeting, the OPEC+ alliance said oil market fundamentals and the outlook consensus pointed to a "well-balanced" market, and that "current volatility is not caused by fundamentals, but by ongoing geopolitical developments."
In fact, the coalition continues to expect the oil market to be in surplus in every quarter of 2022, including a full-year oversupply of 1.3 million b/d, according to a report prepared for delegates by the OPEC secretariat and seen by S&P Global.
The market analysis appears not to have downgraded the production forecast for Russia from the figures presented at the March 2 OPEC+ meeting.
Ministers have been adamant that Russia, one of the top crude producers in the world with output of 10.11 million b/d in February, according to S&P Global estimates, will remain in the OPEC+ fold, batting away criticism for standing by Moscow in the escalating Ukraine crisis.
"Russia is an important member and leaving the politics aside, that volume is needed today unless someone is willing to create 10 million b/d, we don't see that someone can substitute Russia," UAE energy minister Suhail al-Mazrouei had said at an energy conference in Dubai on March 28.
The OPEC+ alliance, which controls some half of global oil supply, has gradually rolled back the record production cuts it instituted during the worst of the pandemic, saying it aims to balance supply with emerging demand from the recovery.
Under the deal, quotas for some countries were amended in line with production baseline changes agreed last July for Saudi Arabia, Russia, Iraq, the UAE and Kuwait that reflect their higher spare capacity.
The new baselines allow Saudi Arabia and Russia to increase production in May by 115,000 b/d, Iraq by 47,000 b/d, the UAE by 35,000 b/d and Kuwait by 29,000 b/d -- all slightly higher amounts than were previously allowed.
The next OPEC+ ministerial meeting is scheduled for May 5.
OPEC+ ministers did not hold a press conference after the decision -- the fifth monthly meeting in a row that officials have declined to take questions.
Crude prices have tumbled on reports that the International Energy Agency has called an emergency session for April 1 to discuss another release of strategic oil stocks, including potentially 1 million b/d from the US.
A potential Ramadan ceasefire in Yemen, as well as resurgent COVID-19 cases in China, has also weighed on prices recently, with front-month ICE Brent futures trading at $106.90/b as of 1432 GMT.
But those prices are still far too high for many consuming countries dealing with rampant inflation, and outages in Kazakhstan, where pipeline maintenance could knock 320,000 b/d of crude offline in April, along with continued underperformance by OPEC+ members relative to their quotas, are contributing to the tight market.
Entreaties and cajoling from major oil importers and their energy watchdog the IEA for more crude have not only fallen on deaf OPEC+ ears but potentially backfired.
In an extraordinary meeting held after the production rise agreement, OPEC ministers voted to no longer use the IEA as a source of data on its members' crude output.
Unit: million b/d