VIENNA: Major oil producers led by Saudi Arabia and Russia stuck to a previously decided output boost on Thursday, despite calls for bigger increases to tame crude prices.
Russia’s invasion of Ukraine has exacerbated concerns about oil supplies, sending prices to record highs this year.
But a respite is not in sight.
In their monthly video conference, which lasted about an hour, the 23 members of OPEC+ agreed to add another 648,000 barrels per day in August, the same as for July.
Analysts had widely expected the move, calling the gathering of the Vienna-based Organization of the Petroleum Exporting Countries and their partners a “rubber stamp” meeting.
Jeffrey Halley, analyst at OANDA trading platform, said before the meeting that he did not expect surprises as “OPEC+ can’t even meet its present targets, and hasn’t for a long time.”
The 13 members of OPEC, chaired by Saudi Arabia, and their 10 partners, led by Russia, drastically slashed output in 2020 as the coronavirus pandemic and the resulting lockdowns sent demand plummeting.
Since last year, they have been gradually increasing output again. In recent months, the United States and other top oil consumers urged OPEC+ to open the tabs more widely.
The group finally decided at its last meeting in early June to add 648,000 barrels per day to the market in July, up from 432,000 in previous months.
But the larger-than-expected boost failed to cool prices.
Biden heading to Saudi Arabia
Since Russia invaded Ukraine on February 24, the international benchmark, Brent North Sea Crude, has added around 17 percent, while the US benchmark WTI has jumped more than 18 percent.
Analysts have warned that only a recession may be able to bring down prices.
“The prices will likely push higher unless the recession fears take the upper hand,” said Ipek Ozkardeskaya, an analyst at Swissquote Bank.
Several OPEC+ members have been failing to meet the output quotas, while Iran and Venezuela – and now also Russia – are blocked by sanctions.
The United Arab Emirates said this week it was close to its oil output ceiling, ahead of a regional visit by US President Joe Biden, who is expected to lobby for increased production.
Biden will visit neighbouring Saudi Arabia, the world’s biggest oil exporter, as part of his tour next month, but analysts doubt it will convince OPEC+ to boost output.
On Monday, at the meeting of the G7 club of industrialised nations in Germany, French President Emmanuel Macron was caught on camera telling Biden details of a conversation with UAE leader Sheikh Mohamed bin Zayed Al-Nahyan.
According to Macron, Sheikh Mohamed said the UAE was at its “maximum” capacity and Saudi Arabia also faced a limit for raising production.