If Russia’s output falls substantially under the new sanctions imposed by the European Union, Saudi Arabia is reportedly prepared to increase oil production in response to urging by the United States.
As investors cashed in on a recent rally ahead of a key producers meeting, oil prices fell on Thursday morning by more than 2% with US West Texas Intermediate (WTI) crude dropping to around $112 a barrel and Brent crude going down $2.07, or 1.8%, to $114 a barrel.
Previously on Wednesday, WTI has risen 0.5% rise while Brent crude was up 0.6% after the benchmarks have marched higher for several weeks due to the squeezed Russian exports have been squeezed by EU and US sanctions.
Even though the oil price has risen to its highest point in a decade as a result, Saudi Arabia has resisted calls by the White House to boost production up until now with the kingdom arguing it needed to keep spare capacity in reserve.
As the Financial Times wrote on Wednesday, Saudi Arabia is prepared to raise its oil production if Russia’s output falls substantially, and production increases scheduled for September would be brought forward to July and August.
However, there’s no plan within the grouping of the Organization of the Petroleum Exporting Countries (OPEC) and associated allied producers, including Russia, for OPEC+ to change its production policy. Two OPEC+ sources said that the organization’s technical committee trimmed its 2022 forecast for the oil market surplus by about 500,000 bpd to 1.4 million bpd.
That stand was confirmed by five sources after their meeting on Wednesday saying that despite seeing tighter global markets, OPEC was set to stick to its modest monthly increases in oil output.
According to The Wall Street Journal, some OPEC members were considering suspending Russia from the agreed production plan to allow other producers to pump significantly more crude, but the idea wasn’t discussed during Wednesday’s technical meeting.
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