OPEC and its allies (OPEC+) have agreed to increase oil production by 400,000 barrels a day in March.
The 23-nation coalition led by Saudi Arabia rubber-stamped the nominal increase, but data continues to show most members failing to provide their share of even this modest increment. Lack of investment or militia unrest are taking a toll on exporters from Nigeria to Libya, placing an increasing strain on the remaining reserves of Middle Eastern countries.
The group’s shortcomings have helped propel crude prices to a seven-year high above $90 U.S. a barrel, as supplies fail to keep pace with the vigorous post-pandemic rebound in fuel consumption.
The rally is whipping up a wave of inflation that’s frustrating central banks and inflicting a cost-of-living crunch on millions of people, a political issue for U.S. President Joe Biden ahead of this year’s midterm Congressional elections.
The Organization of Petroleum Exporting Countries and its partners (OPEC+) ratified their scheduled increase at a short online meeting. The group has made identical promises for several months, however, and been unable to fully implement them.
As doubts grow about the whether the anticipated expansion in global inventories will actually happen this quarter, forecasts are piling up for a return to prices of $100 U.S. a barrel or more.
OPEC’s 13 nations increased production by only 50,000 barrels a day in January as slight gains across the group were wiped out by a 140,000 barrel-a-day decline in Libya. The North African nation was stricken with a blockade of its western fields by militias, forcing the shutdown of its biggest reservoir, Sharara.
The 10 OPEC nations engaged in managing supplies increased by 160,000 barrels a day in January, about two-thirds of their targeted amount. The full 23-nation OPEC+ alliance is cutting far more than required, with a compliance rate of 122% in December.
Even Russia, which throughout the five-year history of OPEC+ has often preferred to increase production more quickly, is suffering from constraints. The country’s producers pumped 46.53 million tons of crude oil and condensate in January. That could convert to 10.05 million barrels a day, or 50,000 below its quota for the month.
OPEC+ is scheduled to meet again on March 2.
