RIYADH: The Organization of the Petroleum Exporting Countries members and its allies, known as OPEC+, will hold its monthly meeting on Wednesday amid mounting concerns of a potential supply distribution in light of the Ukraine-Russia conflict.
Although OPEC+ — which includes Russia — is expected to stick to its plans of adding a supply of 400,000 barrels per day in April, it is meeting tomorrow to set policy and decide on whether to increase its output.
Signalling market tightness, the group has revised down its forecast for an oil market surplus this year by around 200,00 barrels per day to 1.1 million bpd three days ahead of the meeting.
This happens as rising concerns about disruptions of Russian energy supplies are pressing higher oil and gas prices.
Following Russia’s invasion of Ukraine, European benchmark Brent crude prices have skyrocketed to reach over $105 per barrel for the first time since 2014, with US West Texas Intermediate crude surging past $100 per barrel by 1252 GMT.
Analysts have been warning against a further surge in oil prices to hit $125 per barrel by this summer, a note from the global investment bank Goldman Sachs showed.
Fears towards higher oil prices are driven by the uncertainty and sanctions that could result in a supply shock in an already tight global energy market coupled with the geo-political fallout from Russia's invasion.
Recent days have seen the US and its allies, including the UK and the EU, impose harsh sanctions against Russia to impede its ability to do business, including blocking certain banks’ access to the SWIFT international payment system.
The sanctions imposed have disrupted one of the world’s large oil exporters, as buyers of Russian oil experience difficulties with payments and vessel availability.
Although a surge in oil prices might be benefiting oil producers, it would result in rising costs and slower economic activity.
Meanwhile, Russian President Vladimir Putin has had a phone call with Abu Dhabi Crown Prince Mohammed bin Zayed Al-Nahyan during which the two leaders pledged to continue coordination on global energy markets.