OPEC and participating non-OPEC oil producing countries will adhere to plans for a gradual oil output increase, amounting to 432,000 b/d in June. The news follows the conclusion of the 28th Ministerial Meeting held via videoconference May 5.
The decision was made amid the volatility of the markets caused by Russia's invasion of Ukraine and new COVID-19 lockdowns in China. The meeting also came a day after the European Union (EU) proposed for new sanctions against Russian oil (OGJ Online, May. 4, 2022).
During the meeting, it was noted that continuing oil market fundamentals and the consensus on the outlook suggest a balanced market. It further noted the ongoing impact of geopolitical factors and issues related to the current pandemic.
OPEC now expects world oil demand to increase by 3.67 million b/d in 2022, down 480,000 b/d from its previous forecast. China's lockdown measures are dampening demand for transport fuels and petrochemical feedstock.
OPEC+ expects oil production from non-OPEC countries in the alliance to average 18.2 million b/d, down 600,000 b/d from the previous forecast, partly reflecting lower Russian supplies.
Speaking ahead of the meeting, 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 b/d cannot be made up from elsewhere. The spare capacity just does not exist,” Barkindo said.
“Higher prices could be around the corner. The oil market has not fully priced in the potential of an EU oil embargo, so higher crude prices are to be expected in the summer months if it’s voted into law,” said Bjornar Tonhaugen, head of oil markets research at Rystad Energy.
The 29th OPEC and non-OPEC Ministerial Meeting will be held June 2, 2022.
