Top oil producers hold course despite Ukraine war

VIENNA — Saudi Arabia, Russia and other top oil producers on Wednesday agreed to only gradually open the taps, despite Russia's assault on Ukraine sending prices spiralling.

Both WTI crude and Brent broke above $110 a barrel on Wednesday. Brent is at a high last seen in 2014, while WTI is at levels not seen since 2013.

OPEC+ — at monthly back-to-back meetings that lasted less than an hour — decided to stick to a decision from last year for an output target of 400,000 barrels per day for April as well, the group said in a statement.

Analysts had widely expected the 23-member group to stick to its guns. A next meeting will be held on March 31, the group said.

On Sunday, Riyadh, the capital of a leading member state of the Organisation of the Petroleum Exporting Countries (OPEC) confirmed the commitment of the 13-country cartel to the agreement with its 10 partners, led by Moscow, which faces international criticism and sanctions over its invasion of Ukraine.

Saudi Arabia’s Crown Prince Mohammed Bin Salman "affirmed the kingdom's keenness on the stability and balance of oil markets", according to the Saudi Press Agency.

Wednesday's meetings, held via video conference, come a day after International Energy Agency (IEA) countries agreed to release 60 million barrels of oil to stabilise global markets.

The United States will contribute half of the amount, President Joe Biden announced.

But the move has failed to assure markets, and analysts had low expectations that OPEC+ would take any decision to rein in surging prices.

"The war in Ukraine is getting very ugly and destructive and hostilities between the West and Russia are intensifying. High risk for disruptions to both crude and natural gas," Bjarne Schieldrop of Seb said ahead of the meeting.

OPEC+ has so far resisted pressure from major oil consumers, such as the US, to open the taps more as some of its members, including Nigeria and Angola, struggle to meet quotas. 

Between December and January, OPEC members boosted their production by 64,000 barrels per day (bpd), far below their 400,000bpd agreement, according to the organisation's last monthly report.

"The pledge from OPEC+ to increase supply is so far a paper promise... adding to the shortness in the supply market and further stoking the bullish price environment," Louise Dickson of Rystad Energy said.

OPEC, whose secretariat is based in Vienna, had drastically slashed production in 2020 as the COVID-19 pandemic began to spread through the world, pummelling demand and prices.

Wednesday's meeting takes place at a key moment as negotiations to revive the 2015 Iran nuclear deal are widely expected to come to a head in the coming days.

The deal provided sanctions relief for Tehran in return for strict curbs on its nuclear programme but has been disintegrating since former US president Donald Trump withdrew from it in 2018 and reimposed sanctions, including on Iran's oil exports.

If an agreement were to be found and sanctions lifted again, it could unlock the Iranian exports.