OPEC+ Won’t Boost Oil Supply As Russia Cuts, Delegates Say

(Bloomberg) --

Russia’s partners in the OPEC+ oil coalition signaled they won’t boost output to fill in for cutbacks announced by Moscow. 

The OPEC+ group led by Saudi Arabia will maintain output despite plans by the Kremlin to cut 500,000 barrels a day in retaliation for international sanctions, according to delegates who declined to be identified.

Riyadh and its partners have indicated they aim to stick with production targets fixed late last year for the rest of 2023, believing that these will keep global oil markets broadly in balance amid an uncertain outlook for demand and supply.

While the US and other consumers repeatedly urged the Organization of Petroleum Exporting Countries to fill in any gap left by Russia, the group has been unmoved, remaining concerned that increasing output could oversupply the market and endanger oil revenues for its members.

“I doubt Russia’s OPEC+ partners were taken by surprise and do not expect the supply reduction will alter their ‘stay put’ policy stance,” said Bob McNally, president of Rapidan Energy Group and a former White House official.

OPEC officials have indicated they’re still apprehensive that the resurgence in Covid cases in China could derail the country’s economic recovery as it reopens. Secretary-General Haitham Al-Ghais said this week the disease is a “beast” that menaces that global economy with uncertainty. 

Saudi Energy Minister Prince Abdulaziz bin Salman said last week in Riyadh that the bar for any intervention will be very high: “I will believe it when I see it and then take action.”

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