LONDON/DUBAI: OPEC+ agreed to stick with existing oil output policy and raise output by 432,000 barrels per day from May. 

Confirming the vote on the deal was done and a consensus reached, OPEC+ will hold it’s next meeting on May 5.

The statement from the group suggested current volatility in the oil market was due to geopolitical tensions, after the completion of the 27th OPEC and non-OPEC Ministerial Meeting on March 31. 

The United States had urged OPEC+, as the alliance is known, to boost production as high energy prices have contributed to soaring inflation across the world, which has threatened to severely derail the recovery from the Covid pandemic.

OPEC Secretary General Mohammad Barkindo encouraged OPEC+ members “to stay the course” regarding the group’s decision, according to an OPEC statement.

He also said that OPEC+ members should remain “vigilant and attentive to ever-changing market conditions.”

Oil Price Volatility

Crude prices have spiked over fears of a major supply shortfall after Moscow invaded Ukraine on February 24. Russia is the world’s second biggest exporter of oil after Saudi Arabia.

It has retreated since then on hopes that Moscow and Kyiv could agree on a cease-fire, which would ease concerns over Russian supplies.

Covid lockdowns in China have also weighed on prices as the country is the world’s top crude consumer.

The recent fall in prices have made it “even less likely” that OPEC+ will decide to step up production, said Carsten Fritsch, analyst at Commerzbank.

Oil prices tumbled again on Thursday on reports that the United States is considering tapping its reserves, but they remain above $100 per barrel.

White House plans to tap oil reserves

The White House is expected to announce a plan to release a million barrels a day for several months — totalling up to 180 million, according to Bloomberg News.

“It gives the group no incentive to lift the production cap more than the planned” increase, said Bjarne Schieldrop, chief commodities analyst at SEB.

OPEC+ replaces IEA numbers 

OPEC also decided to exclude the International Energy Agency’s oil production estimates, following months of argument between the two bodies.

A statement after the meeting read: “The Conference, in a short meeting, approved with immediate effect, the replacement of the International Energy Agency (IEA) with Wood Mackenzie and Rystad Energy as secondary sources used to assess OPEC Member Countries crude oil production.”

(With input from Reuters/AFP)