Russia Shortfall Creates OPEC+ Conundrum

Saudi Arabia and other OPEC members may boost oil output to offset a drop in Russian production.

• Western sanctions have knocked Russian crude production by about 1mn bpd.
• The decision may be taken at todays meeting. The source speaking with news outlets this week has said that the other OPEC members may not make up the whole shortfall left by Russia and any output increase may be staggered.
• Some sources expect the announcement after this afternoons OPEC+ meeting while others have said it could come later.
• OPEC+ ministers are widely expected to stick to its existing plan for a regular monthly crude increase of 432,000 bpd. The group has so far rejected to be swayed by international calls to increase production in the wake of soaring crude prices. Group officials have instead claimed the market issues are a refining problem rather than that of crude production.
• The EU oil ban against Russia may force production further still, which has prompted discussions by OPEC members to step in to help alleviate at least some of the shortfall.
• Russia was already producing below its OPEC+ target of 10.44 million bpd in April with output of running at about 9.3 million bpd.
• Saudi Arabia is now producing 10.5 million bpd and has rarely tested sustained production levels above 11 million bpd. Saudi along with the UAE have around 2mn bpd of spare capacity.