RIYADH: Amid geopolitical tensions and market volatility, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, will meet on May 5.
OPEC+ ministers are expected to agree to raise production targets by 432,000 barrels per day for June, four OPEC+ delegates told Reuters.
Under a deal reached in July last year, the group is set to increase output targets by 432,000 bpd every month until the end of September, to unwind its remaining production cuts.
In late March, it agreed to go ahead with the planned output increase for May.
The OPEC+ meeting this week comes against the backdrop of a major announcement from the European Union which on Wednesday proposed a phased oil embargo on Russia in its toughest measures yet to punish Moscow for its war in Ukraine.
OPEC Secretary General Mohammad Barkindo, in a speech seen by Reuters to a meeting of the OPEC+ Joint Technical Committee taking place on Wednesday, said it was not possible for other producers to replace Russian supply.
“What is clear is that Russia’s oil and other liquids exports of more than 7 million bpd cannot be made up from elsewhere. The spare capacity just does not exist,” he said.
“However, its potential loss, through either sanctions or voluntary actions, is clearly rippling through energy markets.”
Oil prices jumped by more than 4 percent on the EU announcement, with Brent crude rising to near $110 a barrel.
Bigger 2022 surplus amid slower demand growth
OPEC+ sees a surplus of 1.9 million barrels per day in 2022, 600,000 bpd higher from a previous forecast, amid expectations of slower demand growth this year, a report seen by Reuters showed on Wednesday.
Read more: Russia sees its oil output falling by up to 17% in 2022 — document
The revision reflects a weaker oil demand growth forecast adopted by the Organization of the Petroleum Exporting Countries in its April oil monthly report.
OPEC now expects 2022 world oil demand to expand by 3.67 million bpd in 2022, down 480,000 bpd from its previous forecast.
The group cited the impact of Russia’s invasion of Ukraine, rising inflation as crude prices soar, and the resurgence of the omicron coronavirus variant in China as reasons for the revision.
(With input from Reuters)