Oil prices fall on prospect of OPEC offsetting Russian output loss

Oil prices fell on Thursday after speculation that Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries may increase crude production to offset any decline in Russian production.

Brent crude fell $2.82, or 2.4 percent, to $113.47 a barrel, after rising 0.6 percent on Wednesday.

US West Texas Intermediate crude fell $2.81, or 2.4 percent, to $112.45 a barrel, after rising 0.5 percent on Wednesday.

Both benchmarks recorded gains for weeks due to pressures on Russian oil exports due to European and US sanctions on Moscow after its invasion of Ukraine.

Prices also received support from China’s gradual easing of strict anti-Covid-19 restrictions.

But oil prices fell today, Thursday, before the meeting of the Organization of the Petroleum Exporting Countries and its allies, known as (OPEC +), during which the organization will decide on oil production policy in July.

Two sources in OPEC+ said on Thursday that Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries may increase oil production to compensate for the decline in Russian production.

One of the OPEC + sources familiar with the Russian situation indicated that Moscow may agree to increase the production of other countries to compensate for the decline in Russia’s production, but not necessarily to compensate for all the shortfall.

The Kremlin maintains that it can alter the route of oil exports to reduce losses from EU sanctions, but analysts remain skeptical.

The Wall Street Journal reported on Tuesday that some OPEC members are considering the idea of ​​suspending Russia’s participation in the agreement on the production plan, to allow the rest of the producers to pump more oil under requests from the United States and European countries.

However, two OPEC+ sources told Reuters that a technical meeting on Wednesday did not discuss the idea. Six other OPEC+ delegates said the group had not addressed the idea.