Unable To Replace Russian Supplies, OPEC+ Maintains A Moderate Increase In Oil Production

The logo of the Organization of the Petroleum Exporting Countries (OPEC) outside its headquarters ahead of the OPEC and non-OPEC meeting, Austria, December 6, 2019. (Antara/REUTERS/Leonhard Foeger)

JAKARTA - OPEC+ is likely to maintain a modest increase in oil output on Thursday, citing geopolitical irresponsibility and supply disruptions while stressing its concerns over the demand outlook due to China's new COVID-19 lockdown.

A delegation from the group said OPEC+ would agree to another monthly increase of 432,000 bpd in its production target for June.

OPEC+ includes the Organization of the Petroleum Exporting Countries and allies such as Russia.

Under an agreement reached in July last year, the group will increase its target by 432,000 barrels per day every month until the end of September, in order to release any remaining production cuts.

The OPEC+ meeting came a day after the European Union proposed a phased oil embargo on Russia in its toughest yet punitive action to punish Moscow for its war in Ukraine.

OPEC Secretary General Mohammad Barkindo said it was impossible for other producers to replace Russian supplies.

"What is clear is that Russia's oil and other liquid exports of more than 7 million barrels per day cannot be carried out from other places. There is no spare capacity alone," said Barkindo, as quoted by Antara, Wednesday (4/5/2022).

Brent oil prices rose on Thursday to trade above 111 dollars a barrel.

OPEC now expects 2022 world oil demand to increase by 3.67 million bpd in 2022, down 480,000 bpd from its previous estimate. Barkindo said China's lockdown was limiting demand.

The United States has repeatedly called on OPEC to increase production but the Saudi-led organization has rejected the call amid strained relations with Washington.

The Western energy watchdog, the International Energy Agency, agreed last month to release a record volume of their strategic inventory to help cool prices and offset disruptions to oil supplies from Russia.