On Thursday, the Organization of Petroleum Exporting Countries (OPEC) reaffirmed its commitment to gradually reopening its oil taps, agreeing to increase output targets for May by 432,000 barrels per day.
At the conclusion of the 27th OPEC and non-OPEC Ministerial Meeting, the oil producers’ group and its allies, known as OPEC+, decided not to deviate from their months-long schedule of gradual increases.
Although oil prices recently surpassed the $100 mark, OPEC insisted that some of the factors driving the increase, such as the Russia-Ukraine conflict, are unrelated to the cartel’s operations and have little to do with the commodity’s supply.
Russia is the world’s third-largest oil producer, trailing only the United States and Saudi Arabia, and the world’s largest crude exporter, as well as a major producer and exporter of natural gas.
Nigeria’s international benchmark, Brent crude, was down 5.6 percent to $107.05 yesterday.
Even though Nigeria has been struggling to meet lower production allocations, the oil cartel increased Nigeria’s production quota from 1.735 million barrels per day in April to 1.753 million barrels per day in May.
Nigeria had been struggling to meet its OPEC quota for months, and had a 300,000 barrels per day deficit at the last production circle, owing to theft, aging upstream infrastructure, sabotage, and technical issues.
Despite the oil producers’ organization allowing over 1.7 million barrels per day output, the country managed to increase production to around 1.4 million, the highest in recent memory, according to the latest OPEC review.
OPEC stated after its meeting yesterday that continuing oil market fundamentals and consensus on the outlook pointed to a well-balanced market, and that current volatility is caused by ongoing geopolitical developments rather than fundamentals.
OPEC and participating non-OPEC oil-producing countries agreed to reaffirm the decision of their ministerial meeting on April 12, 2020, and to endorse the baseline adjustment, production adjustment plan, and monthly production adjustment mechanism approved by the organization in subsequent meetings.
The group led by Sanusi Barkindo also decided to stick to its “decision to adjust upward the monthly overall production by 0.432 mb/d for the month of May 2022.”
OPEC emphasizes the critical importance of full conformity and the compensation mechanism, noting that the compensation period has been extended until the end of June 2022.
“Compensation plans should be submitted in accordance with the 15th OPEC and non-OPEC ministerial meeting statement,” it said. The body also set the date for its next meeting for May 5, 2022.
Meanwhile, President Joe Biden is considering releasing one million barrels of oil per day for up to 180 days from the Strategic Petroleum Reserve (SPR), a move that would add a significant amount of oil to the global market.
If fully implemented, the president’s plan will aid the United States in weathering demand spikes and supply shortages. The reserve holds about 550 million barrels, with a reported total capacity of 714 million barrels.
The move, according to CNN, was intended to punish oil companies for not increasing production from unused leases on federal land.
The measures are intended to lower gas prices while also putting pressure on oil companies to expand supply. The bold move, which Biden was expected to announce from the White House later Thursday, addresses a looming political problem months before the midterm elections.
