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OPEC – Big Promises, Small Deliveries

As reported by the International Energy Agency in its April 2022 Oil Market Report, oil production by OPEC countries increased by only 40,000 barrels per day in March, well below the 400,000 barrels per day promised. This is also far below the target of 1.5 million barrels per day.

As reported by Reuters, Saudi Arabia is said to have been the biggest contributor, increasing oil production by 100,000 barrels per day. According to the report, Iraq increased production by 80,000 barrels per day, the UEA by 40,000 barrels per day, and Kuwait by 10,000 barrels per day.

Of concern, however, is that African members continue to fall short of their oil quotas. This is particularly true for Libya, which is struggling with local problems that have led to the closure of oil fields and oil transportation facilities. Here, it is estimated that this will result in lower oil production of almost 600,000 barrels per day. Nigeria is also falling short of expectations, although the problems here are more due to infrastructure problems. In recent years, hardly any capital has flowed into investment and maintenance, and this is now making itself felt.

OPEC says it will not take responsibility for the loss of Russian crude oil on the market. OPEC officials have reiterated that the oil market should not be abused for geopolitical purposes and that consumers are suffering from high oil prices.

The US and some of its allies have imposed tough sanctions on Russian oil products, leading to a ban on imports of Russian crude. At the moment, the EU, under pressure from the US, is thinking of following the sanctions, which will lead to a further shortage in the global oil market. This will especially affect consumers because crude oil is an essential commodity, which will affect all sectors.

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