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The OPEC+ group decided on Wednesday to rubberstamp another 400,000 barrels per day (bpd) increase in its collective oil production in April, despite soaring oil prices after a key member of the pact, Russia, invaded Ukraine.
During a short ministerial meeting of OPEC+, the ministers decided to proceed with the monthly increase agreed upon last summer, in a move widely expected by analysts.
In the days before the meeting, sources at OPEC+ and analysts signaled there would be no change in the pact’s production plan, regardless of surging oil prices that are now well beyond comfortable for major oil-consuming nations, including the United States.
The issue with ramping up production more than planned—even if OPEC+ wanted to—is that only Saudi Arabia and the UAE actually have the capacity to do so, but a major bump in production from those two influential OPEC members would mean critically thin spare production capacity globally. Others mostly lack capacity to pump to their quotas, and the gap between the monthly 400,000-bpd nominal increase and the actual increase has been growing, to as much as 900,000 bpd in January, per the International Energy Agency’s estimates.
The OPEC+ meeting on Wednesday decided to leave the plan as-is and didn’t mention the Russian war in Ukraine, which was the reason why oil prices jumped last week to above $100 per barrel for the first time since 2014 and continued to rally to $111 early today.
OPEC+ noted in its press release after a record-short meeting that “it was noted that current oil market fundamentals and the consensus on its outlook pointed to a well-balanced market, and that current volatility is not caused by changes in market fundamentals but by current geopolitical developments.”
According to the production schedule for April provided by OPEC, the OPEC+ alliance’s collective quota is 41.697 million bpd. The leaders of the pact, Saudi Arabia and Russia, each have a quota of 10.436 million bpd for April.
Oil prices continued to rally, with Brent hitting $112 and WTI Crude at $110 per barrel half an hour after OPEC+ concluded the meeting.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.