The Organization of the Petroleum Exporting Countries (OPEC) and allies (Russia) will meet on Wednesday to decide the oil production policy for the coming month. The meeting is under special pretext because oil prices are as high as they have not been for 8 years.
Analysts expect the group to decide in March to raise its oil production again by 400,000 barrels per day. This oil production policy has been in place since the middle of last year and has not changed since. OPEC+ has so far refused to increase oil production, despite pressure from the U.S. They probably want to wait until the COVID situation has returned to normal since OPEC+ had to take considerable losses at the beginning of the pandemic when oil prices slid into negative territory.
Capital Economics said, “With that said, we wouldn’t completely rule out a larger increase, given high oil prices and recent OPEC+ underproduction.”
Whether OPEC+ will really appreciate that oil prices will probably continue to rise is unlikely. If crude oil becomes too expensive, the demand side will eventually try to consume less or if possible look for substitutions such as natural gas.
On Sunday, the United States and Britain discussed new economic sanctions to squeeze Russia. The administration in Washington and its NATO allies stepped up efforts to prevent Russia from invading Ukraine.
Bjarne Schieldrop, an analyst at SEB Securities, said that if Russia invaded Ukraine it would face heavy sanctions. “It would halt exports of natural gas to Europe even more. Natural gas and power prices in Europe would be much higher than the current extremely high prices we have now.”
This, in turn, would only harm the innocent people of Europe.