OPEC+ countries will not increase oil production to meet Russia’s gas cuts. This writes Bloomberg. Russia has announced in response to international sanctions that it will produce 500,000 barrels a day less, but OPEC+ countries are not moving.
Oil prices skyrocketed after Russia’s announcement. For example, the price of a barrel of Brent oil rose 2.8% to $86.90 a barrel. Subsequently, the price stabilized at around 85 euros. A spokesman for OPEC+ countries said that production will not be increased, as this would keep markets in better balance.
“We are confident that OPEC+ will maintain its previously set production targets,” said co-founder Amrita Sen of consultancy Energy Aspects. ‘The trend among member states is that they primarily want stability, and therefore will not make policy changes. Whether or not there is volatility in the markets.’
“Too Much Offer”
With this, the alliance of oil-exporting countries appears to have ignored the call of the United States and other users to fill the vacuum left by Russia. Instead, OPEC+ countries argue that the market should not be flooded with supply, otherwise oil prices will suffer.
OPEC+ allies also feel that China is playing too uncertain a role. The country – which has now reopened after years of corona lockdown – is still at risk of another wave of infections, which could paralyze the country again and thus reduce the demand for oil. OPEC Secretary-General Haitham Al-Ghais earlier this week called the coronavirus a “menacing beast” for the economy.
Possible intervention
While OPEC+ countries appear in no way unwilling to deviate from their pre-agreed production target, Saudi Energy Minister Abdulaziz bin Salman said that intervention is indeed possible, albeit at the extreme extreme. “The bar for a possible intervention is high,” he said. “I won’t believe it until I see it, and then I’ll act.”
Source: BNR
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