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Major oil producers led by Saudi Arabia and Russia are expected to stick to a previously decided output boost at their meeting on Thursday, despite pressure to further increase production.
Russia’s invasion of Ukraine has exacerbated concerns about oil supplies, sending prices to record highs this year.
Hard on the heels of an EU ban on Russian oil imports over the invasion, the OPEC+ cartel agreed at their last meeting in early June to open the taps wider than expected.
But prices continue to be high, and analysts say a respite is not in sight when the 23 members of OPEC+ meet via video conference from 1100 GMT.
“We should expect a rubber stamp,” said Jeffrey Halley, an analyst with Oanda. “Given that OPEC+ can’t even meet its present targets, and hasn’t for a long time, I expect no bearish surprises.”
The 13 members of the Organization of the Petroleum Exporting Countries, chaired by Saudi Arabia, and their 10 partners, led by Russia, drastically slashed output in 2020 as the coronavirus pandemic and the resulting lockdowns sent demand plummeting.
Since May last year, they have been gradually increasing output again. In recent months, the US and other top oil consumers have increased their pleas to open the tabs more widely.
But several OPEC+ members have been failing to meet the output quotas, while Iran and Venezuela — and now also Russia — are blocked by sanctions.
Political theatre
The United Arab Emirates said this week it was close to its oil output ceiling, ahead of a regional visit by US President Joe Biden, who is expected to lobby for increased production.
Biden will visit neighbouring Saudi Arabia, the world’s biggest oil exporter, as part of his tour next month.
“President Biden’s July trip to Saudi Arabia is mostly for political theatre and won’t really lead to a meaningful increase beyond the planned OPEC+ boost of 648,000 barrels per day of supply in July and August,” said Edward Moya, another analyst from Oanda.
On Monday, at the meeting of the G7 club of industrialised nations in Germany, French President Emmanuel Macron was caught on camera telling Biden details of a conversation with UAE leader Sheikh Mohamed bin Zayed Al-Nahyan.
According to Macron, Sheikh Mohamed said the UAE was at its “maximum” capacity and Saudi Arabia also faced a limit for raising production.
G7 leaders agreed to work on a price cap for Russian oil as part of efforts to cut the Kremlin’s revenues.
As prices soar, OPEC, which was set up to “ensure the stabilisation of oil markets”, has been sticking to its strategy.
“There is little chance OPEC does anything to give relief to the market,” said Ipek Ozkardeskaya, a senior analyst with Swissquote Bank.
Analysts have warned that only a recession may be able to bring down prices.
