Alexey Gromov, Chief Energy Officer at the Institute of Energy and Finance, commented to Forbes on the real impact of OPEC+ on the global oil market in the context of the Middle East current crisis.
The OPEC+ countries are likely to announce further production increases, Alexey Gromov says. "But this will only be a symbolic signal to the market that the alliance is ready to increase production," he says. "Even if the alliance names half a million barrels per day, one million or one and a half, everyone understands perfectly well that those who are really able to quickly increase production, that is, Saudi Arabia, Iraq, the United Arab Emirates and Kuwait, are deprived of such an opportunity because of the conflict."
Countries outside the Persian Gulf can only increase production to a very limited extent, Gromov says. In March, against the background of favorable price conditions and demand for oil, only two OPEC countries, Nigeria and Venezuela, increased their production volumes very slightly — by 40,000 b/d and 80,000 b/d, respectively, the expert draws attention. OPEC+ may lift production restrictions for Kazakhstan for the previous overproduction or postpone them to a later date, but the capacities there are already operating at maximum, and the country is unlikely to be able to significantly increase production. Russia, Gromov says, also lacks such capabilities: to increase production, investments are required, which will not be found in the coming months.
"Whatever decision is made at the OPEC+ meeting, there is no reason to expect a serious additional influx of oil to the market in the coming months," Gromov says. "The market will continue to be in a fever until the problems with oil exports through the Strait of Hormuz are resolved."
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