The oil cartel, known as OPEC Plus, said it would continue the program agreed to in July by rubber-stamping a 400,000-barrel-a-day production increase for April.
With the price of a barrel of oil soaring, officials from OPEC and other producers including Russia met by videoconference on Wednesday but declined to take steps to cool the market.
In a statement that had surreal qualities given the surging prices in recent weeks, the group, known as OPEC Plus, said that current fundamentals and the outlook for the future pointed “to a well-balanced market.” The group blamed what it called “volatility” on “geopolitical developments” — in other words, the Russian onslaught in Ukraine.
As a result, the cartel said it would continue a program agreed to in July by rubber-stamping a 400,000-barrel-a-day production increase for April. This size increase is widely considered insufficient by analysts to cool down prices. In addition, OPEC Plus has been producing oil in quantities substantially below its targets.
What OPEC Plus members will actually deliver to the market in the coming weeks is anyone’s guess. Russia produces about one in 10 of the world’s barrels.
But analysts say that Russian crude is struggling to find buyers despite steep discounts approaching 20 percent as buyers and shippers, worried about getting ensnared in Western sanctions against Moscow, look for oil elsewhere. About 70 percent of Russian traded crude is being affected, according to Energy Aspects, a research firm.
“Most European majors are not touching Russian oil, and only a few European refiners and trading firms are still in the market,” the firm said in a note to clients. Freight rates and insurance premiums have also soared.
Even before Russia’s invasion of Ukraine, OPEC Plus was producing substantially less than its targets. The International Energy Agency, a Paris-based group, estimates that OPEC Plus fell about 900,000 barrels a day short of its targets in January.
Saudi Arabia, OPEC’s de facto leader, is likely to have some concern about what is becoming a disorderly rise in oil prices, which touched $113 a barrel on Wednesday. Apparently matters have not reached a point where the Saudis and some of their allies, like the United Arab Emirates, might act unilaterally and put more than their agreed share of oil on the market.
In addition, the Saudis, analysts say, may also be content to let geopolitics take the heat for the oil price spike and keep the cash rolling.
Russia’s deputy prime minister, Alexander Novak, serves as a co-chair of OPEC Plus, so discussions of the details of output increases may be at best awkward. OPEC Plus did not hold a news conference after the Wednesday meeting, perhaps to avoid uncomfortable questions that would have been directed at Mr. Novak.
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Russia’s relations with the cartel do not yet appear so strained that other members — like Saudi Arabia, which considers itself a kind of central banker of oil — are ready to add large amounts of oil unilaterally. That reluctance could shift in the coming weeks, analysts say.
Mechanisms for halting the rise in prices look to be in short supply. Ominously, the announcement on Tuesday by the International Energy Agency of a 60-million-barrel emergency release of oil held in reserves caused a jump in prices, rather than the intended cooling of the market.
“We do not view this as sufficient relief,” analysts from Goldman Sachs wrote in a note to clients on Tuesday. They said reduced consumption of oil because of the high prices — or “demand destruction” — “is now likely the only sufficient rebalancing mechanism.”
In other words, further price increases are needed to bring the world’s thirst for oil back in line with the supply available.