Top oil producers agree on modest supply boost amid demand concerns

May 06, 2022: Saudi Arabia, Russia and other key oil producers agreed on Thursday to another marginal increase in output, bolstered by risks to demand amid coronavirus restrictions in China.

Russia's invasion of Ukraine has added to supply concerns, which have increased with Europe's announced moves on a potential Russian oil embargo.

But in short back-to-back meetings on Thursday, OPEC+ members reconfirmed "the decision to adjust upward the monthly overall production by 0.432 mb/d for the month of June," the group said in a statement.

Prices had soared on Wednesday, with Brent North Sea crude closing above $110 a barrel, its highest level in two-and-a-half weeks.

At around 0945 GMT on Thursday, Brent stood at $110.47 a barrel and American WTI at $107.83 a barrel.

But analysts had widely expected the Organization of Petroleum Exporting Countries (OPEC), led by Riyadh, and their 10 partners led by Moscow to stay the course.

"It is likely that OPEC will stick with its plan despite ongoing instability relating to the Russia-Ukraine conflict," XTB analyst Walid Kudmani told AFP ahead of the meeting, citing "prospects of falling demand due to widespread lockdowns seen in China as a result of rising Covid cases".

As in previous months, the cartel continued to open the taps slightly, a strategy begun in the spring of 2021 when the economy began recovering after the drastic cuts imposed amid the shock of the pandemic.

Thursday's talks via video conference began with technical discussions at the ministerial committee meeting around 1100 GMT and lasted less than an hour.

AFP/APP