Oil-producing group OPEC+ is likely to stick to its plan for modest production increases on Thursday, arguing it’s not to blame for geopolitics and supply disruptions while emphasizing concerns about the demand outlook after fresh COVID lockdowns in China.
Five OPEC+ delegates said the group is expected to agree a further monthly increase in its production target by 432,000 barrels per day for June, in line with a plan to lift production restrictions imposed during the worst of the COVID-19 pandemic in 2020.
OPEC+ comprises the organization of petroleum exporting countries and allies including Russia.
The meeting comes amid rising oil prices, which hit their highest since 2008 at more than $139 a barrel in March after Russia’s invasion of Ukraine exacerbated supply concerns that had already fueled a price rally.
“I don’t think a new decision will be made,” said one of the delegates. Another said it was “highly expected” that the meeting would be brief and stick to plan.
The OPEC+ meeting also comes a day after the European Union, in its toughest move yet, proposed a phased oil embargo on Russia over the war in Ukraine, which Moscow calls a “special military operation”.
OPEC Secretary General Mohammad Barkindo said Wednesday it was unable for other producers to replace Russian exports of more than 7 million bpd. “The spare capacity just doesn’t exist,” he said.
The Brent crude benchmark rose above $111 on Thursday.
OPEC now expects global oil demand to rise by 3.67 million bpd in 2022, down 480,000 bpd from its previous forecast, with Barkindo saying recent Chinese lockdowns are dampening demand.
The United States has repeatedly asked OPEC to increase production, but the Saudi-led organization has balked at the demands amid strained relations with Washington.
The West’s energy watchdog, the International Energy Agency, agreed last month to release record amounts of oil stocks to cool prices and offset supply disruptions from Russia. )
