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OPEC+ preview: Will oil output quotas be raised?

By Angela Barnes

15:36, 28 March 2022

File photo of an oil and gas platform in the sea
Oil analysts tell how they think the OPEC+ meeting will play out on Thursday and share their thoughts on raising production levels – Photo: Shutterstock.

Energy ministers from the Organization of the Petroleum Exporting Countries Plus (OPEC+) nations are preparing to meet on Thursday to discuss raising the oil-supply output to help stabilise rising energy prices.

The meeting is in response to G7 leaders calling on the group to boost crude oil-production levels and offset the impact of sanctions imposed on Russia for its invasion of Ukraine.

However, Russia remains a key part of the OPEC+ alliance, which makes it difficult to imagine calls from the West to raise output quotas beyond the already scheduled 400,000 barrels per day will be heeded.

“Unless someone is willing to come and bring 10 million barrels, we don’t see that someone can substitute Russia,” Suhail al-Mazrouei, United Arab Emirates (UAE) energy minister,  said at the Atlantic Council Global Energy Forum in Dubai on Monday.

The price of oil soared to 14-year highs in March, with the Russia–Ukraine war and sanctions on Moscow further tightening the supply market.

“Russia is one of the top-three crude producers in the world, and exports more than seven million b/d of crude and refined products,” an S&P Global Commodity Insights press release said on Monday. 

“S&P Global analysts estimate that about two million b/d [barrels per day] of Russian crude and 700,000 b/d of product exports have been disrupted so far,” the release added.

Will OPEC+ boost oil production? asked independent oil analyst and ex-head of the International Energy Agency (IEA) Neil Atkinson for his thoughts on whether May production levels will be raised on Thursday, and if OPEC’s case for business as usual is weakening.

Atkinson told “I think OPEC+ will stick to its current policy of raising its nominal output target by 400,000 b/d each month and the virtual ministerial meeting will once again be brief.”

“Even though Russia needs prices to remain as high as possible for as long as possible, it is unlikely to object. This is because OPEC+ has not actually increased its production by the 400,000 b/d called for and is unlikely to do so this time.

“However, there is no chance that Russia would agree to a boost in production above 400,000 b/d. This is because Russia, due to the sanctions, would not benefit from any significant production increase and might actually be worse off if prices fell sufficiently,” he said.

Atkinson further noted that the other thing to bear in mind is the lockdown in Shanghai in response to Covid-19 concerns, which he described as “ominous”.

“It's too early to say there could be a major impact on oil demand caused by the spread of Covid-19, but it is another reason for OPEC+ to be cautious on Thursday,” he added.

Evridiki Dimitriadou, an energy analyst at S&P Global, also shared her thoughts with on whether OPEC+ will boost oil production.

She said: “Several factors could be indicating that OPEC+ will stick to the scheduled modest rise of 400,000 b/d. The UAE has stated their support to Russia’s role in OPEC+, despite the ongoing military conflict – a stance largely signalled by the cartel as a whole as well.

“At the same time, several factors indicating higher potential supply from other sources – coupled with a drop in demand from the world’s largest oil importer, China – could put a temporary (at least) cap on oil prices. The volatility, however, will likely remain high.”

Dimitriadou further noted how the US is considering another release from its strategic reserves, and said that the fact it is also considering revoking Iran’s designation as a Foreign Terrorist Organisation (FTO) would also signify the return of Iranian oil barrels to the market as well. 

“Additionally, according to Baker Hudges’ rig-count data, an increase of nine rigs was observed for the week ending March 25. However, whether further supply can be seen from Venezuela is as yet unclear after the country’s president has not directly condemned Russia’s involvement in the ongoing military conflict in Ukraine,” she added.


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Outcome of less Russian oil production also asked oil analyst Atkinson for his thoughts on whether OPEC’s business-as-usual approach can continue, given that Russia’s production may fall. 

“If Russia’s production does actually fall significantly (but this will not be a factor on Thursday), countries with spare capacity – for example, Saudi Arabia and the UAE – might decide to take advantage by raising production unilaterally,” he said.

Atkinson continued: “There is a precedent for this: Saudi Arabia made voluntary cuts in production in 2020 beyond those agreed with fellow members of the OPEC+ group. Conversely, they could decide to make voluntary increases in production using the time-honoured justification ‘in response to customer requests’.

“Indeed, if Russian supplies do fall sharply, the Saudis and others will find no shortage of customers wanting to buy more barrels. And they will be selling more at higher prices,” he added.

Oil prices and market uncertainty 

Herman Wang, managing editor of OPEC and Middle East News, S&P Global Commodity Insights, explained to on Monday the key role OPEC+ plays in keeping the oil market stable.

He highlighted how some half of the world's oil production capacity is controlled by OPEC+ and thus the alliance remains a critical player in managing the market, as evidenced by the pleas of leaders from the UK, Japan and other oil-consuming countries for more supplies to offset the Russia–Ukraine war.

“So far, however, OPEC+ officials do not appear inclined to raise production aggressively, seeing the geopolitical tensions as not their responsibility. They are also not willing to upset their more-than-five-year partnership with Russia, which has resulted in ties beyond oil,” he said.

Wang also noted that a resurgence of Covid-19 cases in China may also pause decisions: “How much longer OPEC+ will be willing to let oil prices linger at these elevated levels remains a major uncertainty in the market.”

Impact of China’s Covid-19 lockdown

Victoria Scholar, head of investment at Interactive Investor, also noted events in China.

As Scholar said in a note sent to on Monday: “Having rallied to $120 a barrel on Friday in the first weekly gain in three, Brent crude and WTI [West Texas Intermediate] are reversing course as China’s latest lockdown measures prompt concerns about slowing oil demand.

“Both benchmarks are trading lower by more than 3% as the market tries to weigh up the economic fallout from Shanghai’s lockdown against the supply constraints from the war between Russia and Ukraine.

“No doubt OPEC+, which prepares to gather on Thursday, will be paying close attention to China’s Covid situation, with further lockdowns potentially used to support the cartel’s slow and steady mentality towards releasing supply to the market, despite calls for an accelerated output release trajectory.” 

Oil analyst predicts $150 a barrel by summer

Yousef Alshammari, CEO and head of oil research at CMarkits, also shared his thoughts with ahead of the OPEC+ meeting.

“It is almost guaranteed that we won’t see a change in the policy of the alliance, which is set to ramp up production by another 400,000 b/d in May. Oil prices are expected to take this as a bullish signal, and I expect them to rise a little bit this week,” he said.

Alshammari added: “The group has done a fantastic job since the historic agreement back in 2020, yet meanwhile I think one issue that remains a challenge is the undersupply, especially from many of its producers.

“One thing the alliance needs to consider is the significant levels of global inflation, demand destruction and possible recession as a result of continuing high prices that are starting to hurt consumers.

“I do think ramping up production by more than 400,000 b/d is necessary at this stage. Inventories continue to decline, and there is a global risk of losing Russian oil supplies. In our forecast, we see $150 [a barrel being] a possibility by summer.” 

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