OPEC+ still sees no need to change plans despite Russian crisis

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(Bloomberg) – OPEC and its allies have signaled they still see no need to adjust their oil supply plans even as the Russia-Ukraine dispute threatens the biggest market disruption in decades.

“We will not add resources if the market is balanced and the resources are in the market,” UAE Energy Minister Suhail Al-Mazrouei told a conference in Dubai on Monday. OPEC+ is not focused on whether the specific loss of Russian shipments causes an imbalance, he added.

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A number of delegates have privately said they expect the Organization of the Petroleum Exporting Countries and its partners to stick to their long-standing plan and ratify another modest supply increase when of their meeting on Thursday.

The 23-nation coalition led by Saudi Arabia has so far pushed back on pressure to replace Russian supplies, which have been shunned by some buyers following the invasion of Ukraine. Riyadh and Abu Dhabi are keen to preserve ties with Moscow, saying they see no shortage even as Russian exports fall by a quarter and prices hold near $100 a barrel.

If no changes are made, OPEC+ will ratify the 430,000 barrels per day increase scheduled for May. As many members struggle to achieve their planned increases over the past few months and global demand rebounds from the pandemic, the move could lead to further market tightening, exacerbating inflationary pressure hitting the global economy.

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Russian Alliance

The United Arab Emirates said the partnership with Russia, OPEC+’s biggest crude producer after Saudi Arabia, remains strong. It’s a stance that could disappoint US President Joe Biden’s administration and other leaders seeking to isolate President Vladimir Putin.

“Russia is an important member” of OPEC+ and should remain in the group, Al-Mazrouei said. “It’s an alliance to stay; it is an alliance that we need.

READ: UAE signals support for Russia in OPEC+ ahead of group meeting (1)

At the last OPEC+ meeting earlier this month, Saudi Energy Minister Prince Abdulaziz bin Salman made a studious effort to avoid any discussion of Russian military aggression or its consequences on the world. market, urging the meeting to wrap up after just 13 minutes.

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The Prince’s discretion is easy to understand. The relationship with Moscow has been important both economically and politically for the two Persian Gulf exporters, strengthening their control over global crude markets and allowing them to reduce their dependence on Washington.

It was particularly critical for Riyadh as Biden sought to oust Crown Prince Mohammad bin Salman after the murder of columnist Jamal Khashoggi.

The broader oil market has seen a divided response to Moscow’s attack on its neighbor. Major oil companies like TotalEnergies SE and Shell Plc are ending their oil purchases from Russia amid widespread condemnation of the invasion.

However, Chinese oil refiners are quietly buying cheap Russian crude as the country’s supply continues to seep into the market. India also increased its volumes.

Even as buyers are divided, the shockwaves of the invasion have been universally felt. Brent crude futures briefly hit a 13-year high near $139 a barrel earlier this month, stoking the inflationary surge that is inflicting a cost of living crisis on millions. If OPEC+ opts for a minimal response again, this pain can only get worse.

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