At its latest meeting, the OPEC+ group of countries has agreed to continue with its planned relaxation of production cuts by allowing an extra 400,000 barrels per day to come to market in April. While the decision was widely expected, some had hoped for a more drastic increase to compensate for any disruption resulting from Russia’s war with Ukraine.
The International Energy Agency also announced before the meeting that it would proceed with a release of 60 million barrels of global oil reserves, with 30 million coming from the US Strategic Petroleum Reserve alone, to help compensate for supply disruptions.
Speaking to CNBC, Kpler’s Research Head, Alex Booth, said that further increases in production quotas were very difficult for OPEC+ because the UAE and Saudi Arabia were the only countries with substantial spare capacity, adding:
“The danger is that if it is across OPEC+ they show their hand that they can’t really do it as a whole. If it is Saudi and the UAE going alone then they are really butting up against the rest of the organization and then against Russia as well.”
Booth also said that the group may respond to external pressure for production increases by pointing out that the US could also increase its domestic oil production.
While some big oil majors like Chevron and ExxonMobil, which also make lubricants and grease under the Texaco and Mobil brands, have announced plans to increase US production, many shale operators have avoided following suit thus far, even with relatively high oil prices.