Impoverish to survive: why OPEC+ stopped fighting for high oil prices

Alexey Gromov, Principal Director on Energy studies at the Institute for Energy and Finance, commented to the Forbes business publication on the real reasons for the rapid increase in oil production by the OPEC+ countries.

The OPEC+ countries' claim that the world's commercial oil reserves are at a fairly low level today is difficult to dispute, Alexey Gromov said.

"But I would not say that these countries are trying to prevent the return of oil shortages," he notes. — If we talk about the shortage of oil, then rising prices would benefit the alliance. The real reason for the rapid increase in oil production by the OPEC+ countries is to preserve this alliance."

Over the past few years, OPEC+ has consistently reduced production, including through voluntary restrictions, which has caused discontent among a number of countries, especially those who have been a malicious violator of even voluntary commitments, Gromov continues. According to him, such violators include Kazakhstan, Iraq and some other countries that have a large share of Western oil companies in their production structure that do not want to recognize OPEC+ requirements. Since mining is carried out on the basis of a concession, the authorities of these countries cannot change their terms without severing relations with Western partners, Gromov says. In this situation, he believes, OPEC+ had two ways: either to continue production restrictions, risking losing some members of the alliance, or to agree to increase production by individual participants.

"I believe that OPEC+ has adopted the second option in order to maintain manageability within the alliance and its unity, since all its participants understand that OPEC+ is an important tool for stabilizing the situation on the global oil market, and now no one would like to strengthen the trend towards some kind of collapse of this alliance," — Gromov told.

Whether OPEC+ will be able to increase its market share in the current conditions is a long—term question, the expert believes.