Major oil producers to meet amid record crude prices
LONDON — The world’s major oil-producing nations will meet on Wednesday to discuss a further increase in production, as crude prices hit seven-year highs, rocked by geopolitical tensions.
As part of their regular meetings since the Covid-19 pandemic shook the markets, the 13 members of the Organization of the Petroleum Exporting Countries (OPEC) and their 10 allies are meeting by videoconference to fix the exit.
Many analysts expect the grouping, which includes Saudi Arabia and Russia, to decide to continue to increase production by 400,000 barrels per day in March.
This will be in line with their strategy of slowly reopening taps since May last year, after drastic cuts to curb falling prices when the coronavirus started to spread.
“Having said that, we don’t completely rule out a larger increase, given high oil prices and recent OPEC+ undersupply,” Capital Economics analysts said.
Brent oil rose above $90 a barrel on Wednesday, reaching a level last seen in October 2014.
The price of West Texas Intermediate (WTI) crude hit its highest level in more than seven years earlier this month, fueled by easing concerns over the Omicron Covid variant and geopolitical tensions.
In addition to geopolitical uncertainties, analysts noted that OPEC countries and other key producers are struggling to meet targets to increase production by 400,000 barrels per month, adding to the upward pressure on the prices.
“OPEC+’s underperformance and inaction are supporting high oil prices as the group underdelivered its stated production targets by hundreds of thousands of barrels,” said Louise Dickson, an analyst at Rystad Energy.
The group “has pledged to play a passive role in the conversation despite external pressure, mainly from the United States, to increase production and lower fuel prices”, she added.
Schieldrop also noted that the top Saudi producer at the last meeting “made it clear that he would not increase production beyond his cap to cover other members’ losses. No rescue there.”