OPEC+ may need to increase oil production to avoid the market overheating, OPEC+ member Kazakhstan said on Wednesday, as the group of oil producers meets under pressure from the US to put barrels on the market, while most of its members have already exhausted their production potential.
We have always said that the preferred price range is $60-80 per barrel. Today the price is $100. So we may need to increase power to avoid overheating,” Kazakh Energy Minister Bolat Akchulakov told reporters.
The market has largely expected OPEC+ to hold production steady or opt for a slight increase.
The United States has been pressuring OPEC leaders Saudi Arabia and the United Arab Emirates to pump more oil to stem prices, which have been pushed up by rising demand and Moscow’s invasion of Ukraine.
US and Western sanctions against Russia have pushed up the prices of all types of energy, pushing inflation to multi-decade highs and raising interest rates by central banks.
OPEC has increased production by about 430,000 to 650,000 barrels per day per month in recent months, in line with its targets, and has refused to move to larger production increases.
Group sources have cited a lack of spare capacity among members to add more barrels and the need for further cooperation with Russia as part of the broader OPEC+ group.
“It seems unlikely that OPEC+ will do anything when it meets later today,” Investec’s Callum Macpherson said, citing growing concerns about a slowing global economy and a lack of spare capacity.
“OPEC+ is struggling to get to the level where their production limits have now been raised,” he said, adding that a surprise decision to increase production would further pressure oil below $100 a barrel fall.
Production policy from September and possibly beyond will be discussed at Wednesday’s meeting.
By September, OPEC+ should have rolled back all of the record production cuts it implemented in 2020 after the pandemic sapped demand.
By June, however, OPEC+ was nearly 3 million barrels a day below its quotas as sanctions on some members and low investment by others hampered its ability to increase production.
Only Saudi Arabia and the United Arab Emirates probably still have capacity reserves to increase production.
French President Emmanuel Macron said he had been told Saudi Arabia and the UAE had very limited ability to increase oil production.
https://www.independent.ie/business/world/opec-might-have-to-raise-output-so-market-doesnt-overheat-kazakhstan-says-41886932.html OPEC+ may need to ramp up production to keep market from overheating, Kazakhstan says