The OPEC cartel — which has struggled for many months to revive oil supplies halted during the pandemic — effectively failed to increase output at all last month, as members remained plagued by capacity constraints.
While Iraq made a substantial boost, countries such as Libya and Nigeria saw their production fall amid operational disruptions and diminished investment, according to a Bloomberg survey. Even group leader Saudi Arabia didn’t hike by as much as permitted by their agreed quota.
International crude prices are holding near $105 a barrel as OPEC’s struggle is exacerbated by a de facto embargo on Russian supplies by many refiners following the invasion of Ukraine. The lofty price levels are feeding into an inflationary spike that’s battering consumers and threatening growth, alarming policy makers around the world.
Key consumers such as the U.S. have grown exhausted with pressing the Saudis to fill in the supply gap, and taken to deploying emergency oil reserves. The kingdom’s refusal to open the taps more quickly reflects its belief that markets remain adequately supplied despite the war launched by Russia, with which it jointly leads the OPEC+ alliance of producers.
The coalition is likely to stick with its established plan, ratifying another modest addition of 430,000 barrels a day when it gathers on Thursday, according to delegates. But as the survey indicates, the group may struggle to implement much of the stipulated amount.
The Organization of Petroleum Exporting Countries added just 10,000 barrels a day in April, compared with a scheduled 274,000 a day, the survey showed. It pumped an average of 28.7 million barrels a day.
While Iraq bolstered output by 170,000 barrels a day to 4.46 million, Libya countered this with yet another stumble, slipping by 150,000 a day amid port and field closures.
Saudi Arabia added just 70,000 barrels a day, about two thirds of the permitted increment, leaving their production at 10.34 million a day — or roughly 100,000 a day below the kingdom’s target.
Riyadh has already restored the production it slashed during the pandemic, and has returned to average volumes seen before the crisis. In the past five years, it has only pumped at or above its current quota level for periods of a few months at a time.
(Corrects to say OPEC+ is an alliance of producers, not consumers, in fourth paragraph.)
–With assistance from Prejula Prem, John Deane, Brian Wingfield, Fabiola Zerpa and Lucia Kassai.