OPEC fails to increase output as capacity troubles persist
The OPEC cartel -which has struggled for many months to revive oil supplies halted during the pandemic -- effectively failed to increase output at all last month, as members remained plagued by capacity constraints.
While Iraq made a substantial boost, countries such as Libya and Nigeria saw their production fall amid operational disruptions and diminished investment, according to a Bloomberg survey. Even group leader Saudi Arabia didn’t hike by as much as permitted by their agreed quota.
International crude prices are holding near $105 a barrel as OPEC’S struggle is exacerbated by a de facto embargo on Russian supplies by many refiners following the invasion of Ukraine.
The lofty price levels are feeding into an inflationary spike that’s battering consumers and threatening growth, alarming policy makers around the world.
Key consumers such as the U.S. have grown exhausted with pressing the Saudis to fill in the supply gap, and taken to deploying emergency oil reserves. The kingdom’s refusal to open the taps is partly driven by political loyalty to Moscow, with which it jointly leads the “OPEC+” alliance of consumers that meets this week.
The coalition is likely to stick with its established plan, ratifying another modest addition of 430,000 barrels a day when it gathers on Thursday, according to delegates. But as the survey indicates, the group may struggle to implement much of the stipulated amount.