Global: OPEC to raise more oil production

OPEC has agreed on a 648K production increase, on top of the previously expected 430K increase. Thus, Saudi Arabia, Iraq, U.A.E., which has great oil production potential. they will produce more, especially as we saw that Saudi Arabia was not involved in pumping supply for a long time to the market, which was worried about the security of supply due to the Russian sanctions of the West. But the main question is how much oil is there and will it be enough to make up for the Russian oil shortage?

Delegates said the increase will be split proportionally among members as usual. A higher quota will still be allocated to countries that cannot increase production, such as Angola, Nigeria and most recently Russia. This could mean that real supply increases are smaller than the official figure, as has often happened in recent months. Additional supply increases from OPEC+ will likely come from a few countries. Only Saudi Arabia and the United Arab Emirates have significant spare capacity that can be rapidly increased. Many other members have been struggling to meet their production targets for months.

Russia, Saudi Arabia, Iraq and UAE oil production comparison… Source: Bloomberg, OPEC, Rystad Energy

There is one more piece of news to consider before expecting a drop in prices: The European Union has approved a sixth package of sanctions, including a partial ban on oil imports from Russia. The oil imported by Hungary is not within this scope for now. The embargo will prohibit the purchase of crude oil and refined petroleum products delivered by sea from Russia to member states. Pipeline crude will be temporarily exempted as a concession to Hungary and other landlocked countries that rely on Russian supplies via the Druzhba pipeline. The sanctions package also includes the exclusion of Russia’s largest bank, Sberbank, from the international payment system SWIFT.

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