OPEC+ will likely stick to modest oil output increases on Thursday arguing it is not responsible for geopolitics and supply disruptions while stressing its worries over the demand outlook due to new COVID lockdowns in China.
Delegates from the group said OPEC+ was set to agree another monthly increase of 432,000 barrels per day in its production target for June.
OPEC+ includes the Organisation of Petroleum Exporting Countries and allies such as Russia.
Under a deal reached in July last year, the group is set to increase the target by 432,000 bpd every month until the end of September, to unwind its remaining production cuts.
The OPEC+ meeting comes a day after the European Union proposed a phased oil embargo on Russia in its toughest measures yet to punish Moscow for its war in Ukraine.
OPEC secretary general Mohammad Barkindo said it was not possible for other producers to replace Russian supply.
“What is clear is that Russia’s oil and other liquids exports of more than 7 million bpd cannot be made up from elsewhere. The spare capacity just does not exist,” Barkindo said on Wednesday.
Brent oil prices rose on Thursday to trade above US$111 per barrel.
OPEC now expects 2022 world oil demand to expand by 3.67 million bpd in 2022, down 480,000 bpd from its previous forecast. Barkindo said the Chinese lockdowns were curbing demand.
The United States has repeatedly asked OPEC to raise production but the Saudi-led organisation has resisted the calls amid strained relations with Washington.
The West’s energy watchdog, the International Energy Agency (IEA), agreed last month to release record volumes of stocks to help cool down prices and offset supply disruptions from Russia.