The 23-nation coalition led by Saudi Arabia ratified an increase of 400,000 barrels a day on Wednesday, continuing the gradual restoration of output halted during the pandemic, according to a statement.
The modest monthly supply boost -- which many members have been struggling to fully deliver as they grapple with capacity constraints -- paled into insignificance in a market rocked by Moscow’s military aggression and consumers’ counter-measures, which include a release from emergency fuel stockpiles. Russia is the OPEC+ alliance’s second-biggest member.
While the invasion hasn’t prompted Western sanctions on Russian energy exports, there are growing signs that reluctance among traders and shipowners to handle the country’s oil could bring about an embargo in all but name. Russia’s Urals crude was offered for sale at a record discount but found no bidders.
During Wednesday’s OPEC+ meeting, Mexico’s Energy Minister Rocio Nahle briefly raised a question about Russian oil production, but there was no real discussion of the matter, delegates said, asking not to be named because the meeting was private.
Prior to previous OPEC+ meetings, Riyadh had come under pressure from the U.S. to raise output faster, but consumers are now taking matters into their own hands. The International Energy Agency, which represents major industrialized economies, said on Tuesday that it will deploy 60 million barrels from emergency oil stockpiles around the world.
“The situation in energy markets is very serious and demands our full attention,” IEA Executive Director Fatih Birol said in a statement. “Global energy security is under threat, putting the world economy at risk during a fragile stage of the recovery.”
The effort to cool prices didn’t work. Brent crude, the international benchmark, rose as much as 7.7 per cent to US$113.09 a barrel on Wednesday, the highest since 2013.
The intervention from the IEA is partly an acknowledgment of the fact that the Organization of Petroleum Exporting Countries and its allies would struggle to raise oil production faster, even if they were willing. In January, the group pumped 972,000 barrels a day less than its target, a report from the group’s Joint Technical Committee showed on Tuesday.
OPEC members including Iraq, Nigeria and others, have failed reach their quotas, for reasons ranging from a lack of investment to internal strife. That supply shortfall had been a major driver of the rise in global oil prices, before Russia’s attack on Ukraine lifted prices into triple-digit territory.
In the event of a disruption, Saudi Arabia and some of its Gulf allies are the only countries with large amounts of spare production capacity. That raises the question of whether OPEC+ could ever agree to compensate for a shortage created by Western sanctions, given the stark split between Moscow and the international community over its military aggression.
OPEC has handled many conflicts in its 60-year history, including bloody wars between its own members. The group will meet again on March 31.