OPEC+ meets amid oil production struggles

The OPEC+ meets today, Wednesday, amid market expectations of a steady or slight increase in oil production, as most of its members are already pumping near their maximum production capacities and cannot meet US calls for increased production to fight the rising prices.

U.S. and Western sanctions against Russia have caused energy prices of all kinds to rise, driving inflation to its highest levels in several decades and causing central banks to raise interest rates sharply.

OPEC has raised production, in line with its goals, by about 430,000 barrels and 650,000 barrels per day per month in recent months and has refused to switch to faster increases in production.

Sources to Reuters in the group pointed to the lack of additional production capacity among the members to add more production and the need for more cooperation with Russia within the framework of the broader OPEC+ group.

Today’s meeting will discuss production policies from September and possibly beyond.

By September, OPEC+ will have ended all of the record production cuts it implemented in 2020 to deal with the collapse in demand caused by the Corona pandemic.

In June, OPEC + produced nearly three million barrels per day of crude oil, which is less than its quota, as sanctions imposed on some members and reduced investment in others curbed its ability to calm the world’s energy crisis.

OPEC+ member Kazakhstan said on Wednesday that the cartel may have to increase oil production to avoid hurting the market, as the group of oil producers meets amid US pressure to increase production while most members are already exhausting their production capacities.

“We have repeatedly said that the preferred price is between $60 and $80 a barrel. Today the price is $100. So we may have to increase production to avoid harming the economy,” Kazakhstan’s Energy Minister Bulat Akchulakov told reporters.

The market widely expects OPEC+ to stabilize production or choose to increase it slightly. Three sources from OPEC + said on Wednesday, commenting on Akkulakov’s comments, that they see few opportunities to change production policy.

The Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC), Haitham Al-Ghais, told Algerian television ahead of the OPEC+ meeting on Wednesday that the recovery in oil demand is continuing. Still, it may be at a slower pace than at the beginning of the year and last year.

Al-Ghais told the Algerian news channel in statements broadcast on Tuesday evening and published on social media on Wednesday, “We are still witnessing a steady and distinct increase in demand for oil compared to the period that we experienced in the Corona pandemic in the years 2020 and 2021… There was a recovery after the pandemic, and we are still witnessing A recovery in demand despite the relatively slow pace.

Oil losses expanded during these moments today, Oil is currently down more than $40 from its historic peak when it jumped in early March to levels above $130 a barrel.