Saudi Arabia and other OPEC states may boost oil production to offset a drop in Russian output. A move that could ease sky-high oil prices and surging inflation; and may also pave the way for an ice-breaking visit to Riyadh by U.S. President Joe Biden.
Sources said OPEC+ may speed up output increases to 650,000 bpd a month in July and August; up from the initial plan to raise output by 432,000 bpd a month in July, August and September.
Oil fell $1 to about $115 a barrel on news of the possible OPEC output boost; but it was still near a more than decade high after a spike this year close to an all-time peak of $147.
However, a Gulf source in OPEC+ said a decision on the matter was “highly possible” at Thursday’s ministerial meeting.
U.S. diplomats have been working for weeks on organising Biden’s first visit to Riyadh after two years of strained relations; because of disagreements over human rights, the war in Yemen and U.S. weapons supplies to the kingdom.
U.S. intelligence has accused Saudi Crown Prince Mohammed bin Salman, known as MbS; of approving the 2018 killing of Saudi journalist Jamal Khashoggi, a charge the prince denies.
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Rocketing gasoline prices has driven U.S. inflation to a 40-year high, hitting Biden’s approval ratings as he approaches mid-term elections. Biden, meanwhile, has refused so far to deal with MbS as Saudi Arabia’s de-facto ruler.
OPEC+ agreed to slash output by a record amount in 2020 when the pandemic hammered demand. By September, when the deal expires, the group will have limited spare capacity to lift output further.
Saudi Arabia is now producing 10.5 million bpd and has rarely tested sustained production levels above 11 million bpd.
“There is not much spare oil in the market to replace potential lost barrels from Russia,” said Bjarne Schieldrop, chief commodities analyst at SEB bank.
-Reuters.
