Vienna May 5 2022: OPEC and its Russia-led partners May 5 approved another modest 432,000 b/d increase in production quotas for June, continuing to look past the impacts of the war in Ukraine on the market as they benefit from a windfall in oil revenues.
Even with an expected European ban on Russian oil supplies set to squeeze global supplies further, the 23-country OPEC+ alliance insisted that current supply-demand indicators “pointed to a balanced market,” according to a statement after the group met for just 13 minutes to reaffirm its plan for monthly measured quota hikes.
Delegates told S&P Global Commodity Insights they were closely monitoring Russian oil flows but remain satisfied with ship tracking data observing that its exports are still largely holding up, if significantly shifted from Europe to Asia. Analysis by S&P Global shows that April crude exports were at pre-invasion levels, after a dip in March.
The EU’s proposed ban has yet to be finalized, and the willpower to fully enforce it at a time of high prices remains to be seen, although analysts widely expect that some 3 million b/d of Russian production could be shut in over the next few months.
Unclear visibility on the extent of China’s demand losses because of tightened coronavirus lockdown restrictions is also a concern, delegates said in explaining why the group saw no reason to change course.
The alliance will meet next June 2 to decide on July quotas.
“We can not control geopolitics,” Equatorial Guinea hydrocarbons minister Gabriel Obiang Lima told reporters May 4. “OPEC has been very consistent in what we’ve been doing. We do not control the geopolitics. We can control the amounts we have agreed to produce.”
