LONDON ( Associated Press) – OPEC and allied oil producers including Russia are deciding how much crude to pump into the world on Thursday, despite requests for more expected to rise only marginally. High oil prices are fueling inflation in the US and other countries and reducing the impact of Western sanctions on Russia’s invasion of Ukraine.,
Analysts expect the group, known as OPEC+, to stay on its program of gradual growth in 2020 to restore production cuts made during the depths of the coronavirus pandemic.
So far, that steady pace has meant adding 400,000 barrels per day at the beginning of each month. According to the August edition of OPEC’s official monthly bulletin, starting in May, the level is to be adjusted slightly upwards to 432,000 barrels due to revised baseline production levels.
The modest monthly increase hasn’t helped dampen oil price spikes tied to rekindle global demand for the fuel for cars, trucks and airplanes. The war in Ukraine and sanctions against Russia, the world’s biggest oil exporter, with about 12% of global supplies, has also fed higher prices for fears of disrupting its flows.
Oil prices have a big impact on how much US drivers pay at the pump for gasoline. To cope with high gas prices — $4.24 on average$1.38 up from a year ago — US President Joe Biden preparing to order the release of up to 1 million barrels per day From Strategic Petroleum Reserves, with an announcement expected as soon as Thursday.
In November, the White House announced the release of 50 million barrels In coordination with other countries, and after the war broke out, the US and 30 other countries agreed to an additional release of 60 million barrels.,
Oil prices fall on expectations of a new release, but analysts at UniCredit Bank said the effect of such moves on prices is “usually short-lived.” This is because reserves are limited, and production shortages are open. Once reserves fall below a certain level, the market may fear that they will be insufficient to counter further shortages and that prices will rise.
Higher oil prices also meant more export earnings and tax revenue for the Russian government, in part due to the crushing sanctions imposed on Russian banks and companies, as well as the effects of foreign companies closing their businesses in the country.,
Some buyers are avoiding Russia’s oil, even though Western sanctions have allowed banks to process energy payments. Buyers don’t want to engage in war or fear a sudden tightening of sanctions could lead to Russian oil they can’t sell.
Also the rise in prices is the inability of some OPEC+ members to meet their production quotas. OPEC’s de facto leaders, Saudi Arabia and the United Arab Emirates, have excess production capacity, but have held off on increasing their output and upset the group’s agreed allocation.
Saudi Arabia and the UAE both voted for a United Nations resolution calling for Russia to withdraw from Ukraine, but insisted that they consider the role of OPEC+ in stabilizing world oil markets and shunning international politics. See it as a separation.
UAE’s energy minister doubles down on OPEC’s alliance with Russia. He said that Russia is an important member of OPEC+ with 10 million barrels of oil per day.
“And that quantity is needed today, except in politics,” Suhail al-Mazrouei said on Monday. “Unless someone is willing to come and bring 10 million barrels, we don’t see anyone can replace Russia.”
The United States, European nations, Japan and other Gulf Arab oil producers are calling on Arab oil producers to do more to help lower oil prices. UK Prime Minister Boris Johnson visited the United Arab Emirates and Saudi Arabia this monthwhere he raised the issue.
Brent crude rose from about $90 to nearly $140 before the international benchmark war began – before falling back. On Thursday, US oil fell 4.5% to $102.90, while Brent slipped 3.7% to $109.28.