OPEC+ agrees to slight production increase, despite Russia concerns over supply
The OPEC+ group agreed to maintain its moderate effort to cut production by 432,000 barrels per day in June, ignoring calls from Western countries for higher production and despite concerns that new Russian sanctions could hamper its ability to meet its targets. production goals.
Oil prices continued to trade higher on Friday as the European Union’s recently proposed gradual embargo on Russian oil weighed heavily on supply fundamentals.
Spot Brent crude was trading near $111.5 a barrel on Friday morning, recording a marginal price increase, following the decision by the OPEC+ group, which includes Russia, to stick to its previous production levels agreed.
OPEC said on Thursday that “the persistence of oil market fundamentals and consensus on the outlook indicated a balanced market.”
The group noted that “the lingering effects of geopolitical factors and issues related to the ongoing pandemic” are also impacting oil markets.
Calls for higher output
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The United States and other Western nations have expressed several concerns over OPEC+’s policy of restricting production, blaming the group for record oil prices.
The group also argued that China’s coronavirus lockdowns threaten near-term oil demand prospects.
OPEC Secretary General Mohammad Barkindo said earlier this week that it was not possible for other producers to replace Russian exports of more than 7 million bpd because that spare capacity is not available. not increase.
In March, crude prices rose to their highest level since 2008 at over $139 a barrel after Russia’s invasion of Ukraine exacerbated supply issues that were already fueling a recovery.
This week’s OPEC+ meeting followed the EU’s proposal for a phased embargo on Russian oil earlier this week, in its toughest measures yet over the war in Ukraine, which Russia describes as a “special military operation”.
Meanwhile, a U.S. Senate committee on Thursday passed a bill that could expose OPEC+ nations to lawsuits for collusion in raising crude oil prices, Reuters reported.
The No Oil Producing or Exporting Cartels (NOPEC) bill sponsored by senators including Republican Chuck Grassley and Democrat Amy Klobuchar.
White House spokeswoman Jen Psaki said US President Joe Biden’s administration was concerned about the “potential implications and unintended consequences” of the legislation, particularly in the context of the Ukraine crisis, according to The report.
NOPEC could amend U.S. antitrust law to revoke sovereign immunity that has long shielded OPEC and its national oil companies from lawsuits.
However, the bill must pass the entire Senate and House of Representatives and be signed by Biden to become law.
The sustained rise in oil prices should lead to increased exploration and development efforts in the upstream sector, with more investment decisions likely later this year for complex offshore and deepwater developments, said project observers.
Daily rates for offshore rigs have started to tighten and major international oil companies have stepped up their exploration efforts, after record profits due to higher oil prices.
European supermajor Shell posted its biggest-ever single-quarter profit this week with adjusted profit of $9.1 billion in the first three months of the year, up from $3.2 billion in the first quarter and $6.4 billion in the fourth quarter of 2021.