For the group as a whole, but especially for key members Saudi Arabia and the United Arab Emirates, the relationship with Moscow has been significant both economically and politically.
As the US considered an unprecedented release from emergency crude stockpiles, OPEC and its allies stood back from the crisis engulfing oil markets, refusing to deviate from their schedule of gradual production increases.
According to a statement, the cartel ratified the 432,000 barrel-per-day supply increase set for May in an online meeting on Thursday. President Joe Biden’s plan to release about 1 million barrels per day from crude reserves for several months to ease the disruption caused by Russia’s invasion of Ukraine met expectations, and the decision was largely unrelated to the main driver of market prices.
Brent crude, the international benchmark, was trading at $107.05 in London at 1:05 p.m., down 5.6 percent.
Because the Organization of Petroleum Exporting Countries and its allies are resisting being drawn into the political crisis caused by the military aggression of one of their leading members, consumers are taking matters into their own hands.
For the group as a whole, but especially for key members Saudi Arabia and the United Arab Emirates, the relationship with Moscow has been significant both economically and politically. The alliance has allowed the two Persian Gulf exporters to strengthen their grip on global crude markets while reducing their reliance on the United States.
This has been especially important for Riyadh, as Biden attempted to marginalize Crown Prince Mohammad bin Salman following the murder of journalist Jamal Khashoggi early in his presidency. The Russian crisis has forced the White House to reconsider its strategy, but the kingdom’s de-facto ruler isn’t yet willing to comply.
After an escalation in attacks by fighters in Yemen threatened Saudi Arabia’s oil facilities, some Gulf Arab states are pursuing a written agreement with Washington that could primarily provide defense support.
Political schism
As long as the diplomatic process drags on, OPEC+ shows no signs of responding to consumer demands for more oil.
The group rushed through its previous meeting in early March in just 13 minutes without discussing the Russia-Ukraine crisis, which was dominating global commodities markets. At Thursday’s talks, it broke that record by a minute, according to a delegate.
According to delegates, one change that came out of the meeting was the decision to exclude any data provided by the International Energy Agency from OPEC’s crude-production estimates. It’s a minor technical change intended primarily as a public snub to the agency that represents oil consumers’ interests and plays a key role in coordinating emergency stock releases.
The decision is the result of months of squabbling between the agency and OPEC+, which represents the interests of major energy consumers. After years of closer collaboration, the severe energy crisis that has gripped markets for the past six months, as well as the growing push to reduce carbon emissions, has made cooperation more difficult.
Saudi Energy Minister Prince Abdulaziz bin Salman has mocked the International Energy Agency’s proposals for averting dangerous climate change as “La-La-Land.” When oil prices began to rise last year, OPEC+ ministers blamed the organization, claiming it was discouraging investment in critical resources.
The invasion of Ukraine widened the chasm even more. Fatih Birol, the Executive Director of the International Energy Agency, expressed disappointment with OPEC+’s lack of response to the crisis, which drove crude prices above $100 a barrel. OPEC, ignoring US requests to pump more, led the first coordinated release of oil from its members’ emergency stockpiles in more than a decade in an attempt to lower prices.
Source: Bloomberg
