OPEC+ still sees no need to change plan despite Ukraine crisis

OPEC and its allies signalled that they still see no need to adapt their oil-supply plans even as the Russia-Ukraine conflict threatens the biggest market disruption in decades.

“We won’t add resources if the market is balanced, and the resources are in the market,” United Arab Emirates Energy Minister Suhail Al-Mazrouei said Monday at a conference in Dubai. OPEC+ isn’t focused on whether the specific loss of Russian shipments is causing an imbalance, he added.

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

The 23-nation coalition led by Saudi Arabia has so far rebuffed pressure to fill in for Russian supplies, which have been shunned by some buyers over the Ukraine crisis. If no alterations are made, OPEC+ will ratify the increase of 430,000 barrels a day scheduled for May. With many members struggling to fulfill their planned increases over the past few months and global demand bouncing back from the pandemic, that decision may cause markets to tighten further – exacerbating the inflationary pressure hitting the world economy.

“Russia is an important member” of OPEC+ and is likely to remain in the group, Al-Mazrouei said. “This is an alliance to stay; this is an alliance we need.”

The wider oil market has seen a divided response to Moscow’s invasion on its neighbour. Major oil companies like TotalEnergies and Shell are winding down oil purchases from Russia. However, China’s oil refiners are discreetly purchasing cheap Russian crude as the nation’s supply continues to seep into the market. India has also been picking up volumes.

Even as buyers are divided, the shockwaves of the invasion have been universally felt. Brent futures briefly surged to a 13-year peak near $139 a barrel earlier this month, fanning the inflationary surge that’s inflicting a cost-of-living crisis on millions.

If OPEC+ opts once again for a minimal response, that pain may only worsen.