The OPEC+ group on Wednesday decided to continue with monthly production hikes of 400,000 barrels per day despite spiking oil prices over $110 per barrel, arguing that “current oil market fundamentals and the consensus on its outlook pointed to a well-balanced market, and that current volatility is not caused by changes in market fundamentals but by current geopolitical developments.”
This statement comes as OPEC+ member Russia has invaded Ukraine causing prices to rise by almost $20 per barrel in the last week in a tight oil market.
OPEC+ has been under-producing on its agreed-upon quota’s implying that actual production increases have been lower than planned and that the block is actually producing 900,000 barrels per day less than scheduled for this month, according to the International Energy Agency.
The only countries with spare production capacity in OPEC+ are Saudi Arabia and the United Arab Emirates, with other members lacking capacity to produce their quotas.
On Tuesday the United States and other IEA members agreed to release 60 million barrels from strategic petroleum reserves “to send a unified and strong message to global oil markets that there will be no shortfall in supplies as a result of Russia’s invasion of Ukraine.”