Agency revealed Archyde.comInformed sources said that the leaders of the Organization of the Petroleum Exporting Countries (OPEC) Saudi Arabia and the UAE are ready for a “significant” increase in oil production if the world faces a severe supply crisis this winter.
And on Wednesday, the Organization of Petroleum Exporting Countries (OPEC) and its allies (OPEC +) decided to slightly increase oil production by no more than 100,000 barrels per day only.
Wednesday’s statement referred to the “limited abundance” of the spare capacity, saying that it needed to be preserved in case of “severe supply disruptions”.
And Saudi Crown Prince Mohammed bin Salman said at a summit attended by US President Joe Biden in Jeddah last July that Saudi Arabia announced an increase in its production capacity to 13 million barrels of oil per day by 2027, and after that “it will not have any additional capacity to increase production.” “.
Sources to Archyde.com said, on condition of anonymity, that Saudi Arabia and the UAE could pump “a lot more”, but would only do so if the supply crisis worsened.
“With the possibility of no gas in Europe this winter, with a possible price ceiling for Russian oil sales set in the new year, we cannot put what we have on the market at the moment,” one of the sources said.
The sources did not specify any increase, but said that Saudi Arabia, the UAE and some other OPEC members have between 2.0 and 2.7 million barrels per day of spare production capacity.
“The only time we prove we have more spare capacity is when it comes to a long-term crisis,” the source said.
That could happen this winter, the sources added, as the political and economic standoff between OPEC+ member Russia and the West over Moscow’s invasion of Ukraine shows no sign of abating.
Russia’s invasion of Ukraine since February 24 has pushed gas prices to record levels and lifted international Brent crude to a 14-year high.
As a result, inflation reached its highest levels in several decades and central banks began to raise interest rates sharply.
However, global oil prices have fallen since the March peak and fell again Wednesday after US data indicated weak demand in part because higher prices curbed consumption.
Analysts said that OPEC + sees no sense in adding oil to a market whose indicators are known to curve downward.
“With spare capacity of less than 2 million barrels per day in August, we believe that OPEC + preferred to use temporary stocks to address potential future disruptions,” Tamas Varga of BVM (an independent oil market broker) said in a note.
“There are growing fears of destroying demand, and if the current trend continues, additional barrels will put unwanted downward pressure on prices and, at the same time, unnecessarily deplete the surplus.”
goodwill gesture
After US President Joe Biden visited Saudi Arabia in July to urge Riyadh to increase oil production to calm international markets, analysts expected OPEC+ to increase supplies.
In this context, one of the sources said that Wednesday’s decision to increase production targets by 100,000 barrels per day, one of the smallest increases since the introduction of OPEC quotas in 1982, was a goodwill gesture.
“It’s small in size, yes, but it shows that OPEC+, given the fact that it includes many countries, like Russia, Iran and Venezuela with all their grievances, has managed to muster consensus and move forward,” the source said.