BAKU, Azerbaijan, April 5. OPEC+ is so reluctant to supply more oil to world market amid the current crisis for two reasons, Spencer Welch, Vice President – Consulting Europe, CIS & Africa, Oil-Markets Midstream and Downstream, S&P Global Commodity Insights, told Trend.
“First is that most of the OPEC+ countries are already at maximum production. Second is the Saudi (one of few with spare capacity) is trying to keep both US and Russia (who are part of OPEC+) and the rest of OPEC+ members happy,” the expert believes.
At its 27th meeting, OPEC+ agreed to raise output by 432,000 bpd in May. By doing so, the group stuck to its plan to unwind pandemic-related production curbs by the end of this year. OPEC+ had been raising quotas by 400,000 bpd since August, but faster increases from May merely reflect a long-planned increase in production baselines.
The decision was made amid European announcement of a desire to phase out Russian energy imports with oil from this country accounting for 30 percent of the continent’s total yearly consumption.
Welch believes that it can take years for Europe to phase out Russian oil imports, particularly central European oil refineries which receive Russia crude oil by pipeline, harder for them to switch.
“Negative reaction to Ukraine invasion is particularly strong in Europe, so likely that Europe will try to reduce Russian oil usage as much as possible, this is happening now. Whereas we are still seeing India and China buying Russia crude oil, tempted by the fact that Russian crude is trading at around 2/3 price of non-Russian crude,” he added.
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