Opec+ set for only slight output target increase despite Ukraine

Opec+ will likely stick to its plans for a modest increase in its oil output in May, several sources close to the group said, despite a surge in prices due to the Ukraine crisis and calls from consumers for more supply.

Having raised its target by 400,000 barrels per day each month since August 2021, Opec+ plans agreed last year call for a May increase of 432,000bpd based on raised baselines for Saudi Arabia, Russia, Iraq, the UAE and Kuwait.

Several consuming nations including the United States have urged producers to raise their output by more as crude prices have surged, hitting their highest since 2008 this month at over $139 a barrel.

But major Opec members such as Saudi Arabia and the UAE have held back on increasing their targets, while Opec+, a group that includes Russia, has steered clear of the topic of Ukraine.

Sources have said Riyadh, as a quid pro quo for higher oil supply, wants more Western support in its war in Yemen and security guarantees over an Iranian nuclear deal.

Six Opec+ sources told Reuters the group would most likely stick to the plan for May, with one of them saying Saudi Arabia’s reluctance to agree to a bigger hike also reflected its support for Moscow.

“The Saudis are careful,” the source said. “They don’t want to hike oil output above plan in order not to show they are against Russia.”

A Russian oil source said Russia did not expect Opec+ to raise its planned increase for May and “hopes for Opec+ partners’ support.”

While Opec+ has increased its output target each month, production has not met those targets as some members struggle with capacity constraints, and this has been a factor underpinning prices.

Opec+ missed its target by 1.1 million barrels per day (bpd) in February, according to the International Energy Agency. — Reuters