By Adedapo Adesanya
The price of crude oil skyrocketed by more than 7 per cent as the Organisation of Petroleum Exporting Countries and allies (OPEC+) agreed on Wednesday to stick to their plans of small output rise in April, defying calls for an increase in supply to the market even as prices rally to multi-year highs on Russia supply disruption fears.
As of the time of filing this report, Brent was up 7.7 per cent or $4.50 to $115.9 per barrel while the United States West Texas Intermediate (WTI) was up by 7.2 per cent or $4.42 to $113 per barrel.
The decision to stick to its current output level comes as Russia’s intensifying war with Ukraine entered its seventh day, with fighting raging across the country.
The producer alliance said it had agreed to adjust the upward monthly overall output by 400,000 barrels per day for the month of April.
Although the decision had been widely expected by analysts, the market still clung to its bullishness as OPEC alone accounts for around 40 per cent of the world’s oil supply.
The group is in the process of unwinding record supply cuts of roughly 10 million barrels per day which were put in place in April 2020 to help the energy market recover after the coronavirus pandemic effect on crude demand.
Ahead of the meeting, the International Energy Agency (IEA) said it would move forward with a 60-million-barrel global release to offset energy market disruptions caused by international sanctions against Russia over its war with Ukraine. The U.S. has said 30 million of that total will come from the U.S. Strategic Petroleum Reserve.
The release of oil from the U.S. and other IEA members reflects the magnitude of expected disruptions to global energy markets.
Sanctions imposed on Russia over its invasion of Ukraine have so far been carefully constructed to avoid directly hitting the country’s exports, although there are signs the measures are inadvertently prompting banks and traders to shun Russian crude.
However, some Western oil majors announced plans to pull the plug on their Russian operations.
Analysts note that top oil producers in the Gulf countries led by Saudi Arabia and the United Arab Emirates are unlikely to pursue policy positions on the Russia-Ukraine conflict that end up causing a major rift in the oil market management framework which is key to the stability of revenues over the long term.
On Wednesday, the US imposed new export curbs on specific refining technologies, intended to hurt Russia’s oil refining sector down the road.
