OPEC and its allies stood back from the crisis engulfing oil markets, refusing to deviate from their schedule of gradual production increases as the U.S. considered an unprecedented release from emergency crude stockpiles.
The cartel ratified the 432,000 barrel-a-day supply increase scheduled for May at an online meeting on Thursday, according to a statement. The decision was in line with expectations and very much peripheral to the main driver of prices on the market — President Joe Biden’s plan to release about 1 million barrels a day from crude reserves for several months to ease the disruption caused by Russia’s invasion of Ukraine.
Brent crude, the international benchmark, was down 5.6% at $107.05 as of 1:05 p.m. in London.
Consumers are taking matters into their own hands because the Organization of Petroleum Exporting Countries and its allies are resisting being drawn into the political crisis caused by the military aggression of one of their leading members.
The relationship with Moscow has been significant both economically and politically for the group as a whole, but especially for key members Saudi Arabia and the United Arab Emirates. The alliance has allowed the two Persian Gulf exporters to bolster their control over world crude markets while lessening their reliance on Washington.
That’s been particularly critical for Riyadh as early in his presidency Biden sought to sideline Crown Prince Mohammad bin Salman following the killing of columnist Jamal Khashoggi. The Russian crisis has forced the White House to rethink this approach, but the kingdom’s de-facto ruler isn’t yet ready to play along.
Some Gulf Arab states are pursuing a written agreement with Washington that could primarily provide defense support after an escalation in attacks from fighters in Yemen threatened oil facilities in Saudi Arabia.
As long as this diplomatic process continues to unfold, OPEC+ shows little sign of heeding consumers calls for more oil.
At its previous meeting in early March, the group hurried through in just 13 minutes without discussing the Russia-Ukraine crisis that was dominating global commodities markets. It beat that record by a minute at Thursday’s talks, a delegate said.
One change that did emerge from the gathering is the decision to exclude from OPEC’s crude-production estimates any data provided by the International Energy Agency, delegates said. It’s a minor technical change intended mainly as a public snub to the agency that represents the interests of oil consumers and plays a key role in coordinating releases from emergency stocks.
The decision represents the culmination of months of sniping between the agency, which represents the interests of major energy consumers, and OPEC+. After working together more closely for several years, the severe energy crisis that’s gripped markets for the past six months and the growing push to curb carbon emissions has made cooperation more difficult.
Saudi Energy Minister Prince Abdulaziz bin Salman has derided the IEA’s proposals for how the world could avoid damaging climate change as “La-La-Land.” When the long rally in oil prices began last year, OPEC+ ministers threw the blame back at the agency, claiming it had been discouraging investment in vital resources.
The invasion of Ukraine deepened the rift. IEA Executive Director Fatih Birol said he was disappointed in the lack of a response from OPEC+ to the crisis, which drove crude above $100 a barrel. As OPEC disregarded U.S. requests to pump more, the agency led the first coordinated release of oil from its members’ emergency stockpiles in over a decade in an attempt to push prices lower.
(Updates with video.)