The OPEC+ Joint Technical Committee (JTC) meeting ahead of tomorrow’s main ministerial meeting has concluded without any revisions of demand growth forecasts, according to a Walter Bloomberg tweet.
Reuters cites cartel delegates as saying that OPEC+ is leaning towards an agreement for a small increase in June production targets of 432,000 barrels per day based on an earlier agreement that would be in effect through September.
The group, according to Reuters, expects sanctions to cause a further decline in Russian oil output, perhaps not fully offsetting potential demand declines coming out of China due to COVID lockdowns.
Addressing the OPEC+ JTC, OPEC Secretary-General Mohammad Barkindo noted that it was not possible to fill the gap left by dwindling Russian oil output.
"What is clear is that Russia's oil and other liquids exports of more than 7 million bpd cannot be made up from elsewhere. The spare capacity just does not exist," he said, according to the transcript of a speech seen by Reuters. "However, its potential loss, through either sanctions or voluntary actions, is clearly rippling through energy markets."
Nonetheless, OPEC still sees supply exceeding demand this year by 1.9 million bpd, Reuters reports.
For April, OPEC missed its production target, with OPEC’s 10 members producing only 40,000 bpd more than in the previous month, indicating a shortfall of some 214,000 bpd for OPEC members. The existing output deal called for a 254,000 bpd increase for OPEC countries, and a 400,000 bpd increase overall for OPEC+ production for April.
From October 2021 through March 2022, OPEC output came in lower than the deal commitments in every month from October 2021 through March 2022, with the exception of February 2022, according to a Reuters survey.
Hindering OPEC’s ability to reach output targets are a force majeure in Libya that shows no signs of resolution, and under-production in Nigeria.
By Charles Kennedy for Oilprice.com
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