The “OPEC Plus” federation agreed on Wednesday to continue its plans to increase production, which was decided earlier in April, at a time when prices are expected to rise as a result of the Russian-Ukrainian conflict.
In addition, “OPEC Plus” has increased production by 400,000 barrels per month since last August, in the wake of the fall in production demand due to the “COVID-19” epidemic.
At the time of the fall in prices in April 2020, when none of the market parties asked OPEC Plus to neutralize more barrels, a barrel was less than $ 20, at which point OPEC Plus gradually reduced it in an attempt to recover. Now gradually, without looking at the rapid geopolitical changes.
Oil prices hit $ 110 yesterday as Western sanctions tightened the noose on Moscow over the invasion of Ukraine, which disrupted Russia’s oil sales, the world’s second-largest oil exporter.
Looking at the market fundamentals, the main reason for these price rises is the Russian-Ukrainian crisis, which led to panic in the markets and turmoil in trade, although it is certain that OPEC Plus will take into account any of these volatility. conditions; In light of its policy aimed at stabilizing markets, the Confederates are expected to meet later this month.
By 15:41 GMT, Brent crude traded above $ 113. Western measures have deterred many Russian crude buyers. The measures taken by Western countries have caused problems in exports from Kazakhstan, which is also a member of the Petroleum Exporting Countries (OPEC), Russia and allied oil producing countries.
According to Ricardo Evangelista, a senior analyst at Brokerage Active Trades, traders are increasingly concerned about finding alternatives to Russian oil in a market that is already struggling with the impact of Western sanctions on Russia.
He explained to Asharq Al-Awsat: “Russian oil exports represent about 8 percent of global GDP, and its potential deviation from the international market will inevitably exacerbate the current situation of demand overstating supply.”
Evangelista expects: “Expectations of oil prices will continue to rise as the military situation in Ukraine worsens and the number of market operators to deal with Russian energy stocks increases, with no indication that the crisis will be resolved soon.”
After yesterday’s meeting, OPEC Plus’s report said: “The key factors in the current oil market and the consensus on its expectations indicate a well-balanced market, not because of the current turbulent change, but because of current geopolitical developments.”
The remaining effective cuts to OPEC Plus production due to the epidemic are 2.6 million barrels a day, and the federation is expected to recover it by the end of next September. Oil prices rose sharply as demand recovered strongly due to the decline in the impact of the epidemic.
For its part, the Organization of the Petroleum Exporting Countries (OAPEC) evaluated the decision of the “OPEC Plus” Federation and its six member states yesterday and said in a press release, “It is within the framework of its ongoing effort to achieve stability and equilibrium in global oil markets, especially in Eastern Europe.” As tensions intensify, markets are expected to react.
OAPEC added: “According to this decision, Saudi Arabia’s production is projected to increase by 105 thousand barrels per day to 10.436 million barrels per day, while Kuwait’s production is projected to increase by 27 thousand barrels per day to 2.666 million barrels per day. 30,000 barrels per day, 3.006 million barrels per day and Iraq’s production increased by 44,000 barrels per day to 4.414 million barrels per day, increasing Algeria’s production by 10,000 barrels per day, reaching 1.002 million barrels per day, and Bahrain’s production per day by 5,000 per thousand barrels per day. Reaches the barrels.
Meanwhile, the White House said yesterday that the United States was “too open” to impose sanctions on Russia’s oil and gas sector. It looks at the potential impact on the market as global oil prices rise to an 8-year low and supply disruptions continue to rise.
White House spokeswoman Jen Psaki said in a television interview that Washington was considering targeting Moscow’s largest energy sector with sanctions in the wake of the Russian invasion; But the impact on global oil markets and U.S. energy prices is a key factor in this structure.
When asked if Washington and its Western allies would impose sanctions on Russia’s energy and gas sector, Zaki told MSNBC: “We are very open to that.” “We are investigating it,” he said. It is too much on the table; But we need to evaluate all the consequences of that.
The administration of US President Joe Biden has warned that Russia could impose sanctions on Russian oil if Moscow continues its occupation of Kiev. However, Psaki said on Wednesday that the White House was examining how this could affect markets. “We are reading this very seriously,” he said in another interview with CNN.
On Tuesday, the United States pledged to release 30 million barrels of oil as part of a global commitment to release 60 million barrels of oil in an effort to boost energy markets in the wake of Russia’s invasion of Ukraine, and said it could take further action if needed. Meanwhile, in response to Berlin’s war in Ukraine, the German economy announced that the German government had released part of its national oil reserves to calm the oil market.