Will Opec boost oil output to counter Russia supply disruptions?
In the oil market this week all eyes will be on Opec’s next ministerial meeting on Thursday, after G7 leaders called on the producer group, led by Saudi Arabia, to boost output to compensate for the disruption generated by Russia’s invasion of Ukraine.
The US has been pressuring Saudi Arabia and other Opec members to increase output since September, but the G7 statement ups the ante. Members of the Opec+ alliance, which includes Russia, have so far stuck to a plan agreed last year to only gradually replace production cut at the start of the pandemic.
But with analysts forecasting that a growing international boycott will force Russia’s production to fall by as much as 3mn b/d from April, the Opec case for business as usual is weakening. If Opec members accept that Russian production is likely to fall significantly “there are few advantages and multiple disadvantages, in staying within the current Opec+ agreement”, analysts at Standard Chartered wrote in a note.