The Organization of the Petroleum Exporting Countries (OPEC) and other producing partners, referred to as OPEC+, has decided to stay on track with its plan to increase output by 400,000 barrels per day (bpd) in April, despite calls for stepping up production to cool off spiralling crude oil prices.
The group has been gradually rolling back the historic production cuts that were undertaken when global demand plummeted due to the pandemic. While there are concerns that the escalating conflict between Russia and Ukraine could potentially disrupt demand, OPEC+ had signalled that it may stick to its production increase plan ahead of the meeting on March 2.
“Based on internal consultation held exclusively by the OPEC and participating non-OPEC oil-producing countries in the Declaration of Cooperation (DoC), it was noted that current oil market fundamentals and the consensus on its outlook pointed to a well-balanced market, and that current volatility is not caused by changes in market fundamentals but by current geopolitical developments,” OPEC+ said in a statement.
Global benchmark Brent hit $113 a barrel on news that OPEC+ will stick to its plan of small and gradual increase in output.
The group has scheduled its next meeting for March 31.
The OPEC+ statement said that it reiterates the critical importance of adhering to full conformity and to the compensation mechanism taking advantage of the extension of the compensation period until the end of June 2022. Compensation plans should be submitted in accordance with the statement of the 15th Ministerial Meeting.
OPEC accounts for 40 percent of the crude oil supply in the world.
Earlier on March 1, the US and other member states of the International Energy Agency (IEA) decided to release 60 million barrels of oil reserves to make up for supply disruptions caused by Russia's invasion of Ukraine. The quantum of the release is seen as an indication of the disruption these countries are expecting, given that Russia is one of the world’s largest producers of oil and the second largest producer of gas.
India is closely monitoring the global energy market and has said that it will release some amount of crude from its strategic petroleum reserves (SPR) if needed to boost supply and ensure price stability. Any significant increase in crude oil prices could also push oil marketing companies to increase prices of retail petrol and diesel which they have left unchanged since November.
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