OPEC+ expected to agree another modest supply boost amid turmoil

OPEC and its allies are expected to agree another modest increase in oil production even as the shockwaves from Russia’s invasion of Ukraine send prices above US$100 a barrel.

OPEC and its allies are expected to agree another modest increase in oil production even as the shockwaves from Russia’s invasion of Ukraine send prices above US$100 a barrel.

The 23-nation coalition led by Saudi Arabia will on Wednesday likely ratify a further formal hike of 400,000 barrels a day for April as it continues to revive output halted during the pandemic, according to a Bloomberg survey of analysts and traders. In practice the increment is likely to be considerably smaller, as many members are struggling to restore supplies.

While Riyadh has come under pressure from the U.S. and other key consumers to cool oil’s rally and ease inflationary pressure by opening the taps more quickly, delegates have signaled the Organization of Petroleum Exporting Countries and its allies will continue to move cautiously. While the Russia invasion has sent prices rocketing, it hasn’t yet led to genuine loss of barrels from the market.

In any case, with Russia as the coalition’s second-biggest member it might be difficult for the group to collectively agree on an action to appease the U.S., given the stark split between Moscow and the international community over its military aggression. 

America and other nations have imposed sanctions on Russia, including on some of its central bank’s assets and other financial institutions. While the current restrictions don’t extend to energy, buyers, traders and shipowners are becoming increasingly wary of dealing with Russian commodities.

Only one of the 18 respondents to the survey predicted that OPEC+ would agree an increase bigger than the scheduled 400,000 barrels a day, without specifying how much.