OPEC+ Regular Meeting on the 2nd... "Low Possibility of Oil Production Increase"

"OPEC+ to Maintain Daily Production Increase of 400,000 Barrels in April"
Oil Prices Could Reach $120-$150 if Ukraine Crisis Worsens
Current Russian Crude Export Sanctions Already Priced In

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hwang Yoon-joo] There is an analysis that the OPEC+ is unlikely to expand the scale of oil production increase at the regular meeting scheduled for the 2nd. OPEC+ is a consultative group of the Organization of the Petroleum Exporting Countries member countries and other oil-producing countries, including Russia. Since the United States is demanding an increase in production, it is explained that Russia is unlikely to accept this.

Shim Soo-bin, a researcher at Kiwoom Securities, stated, "Iraq mentioned the opinion that additional production increase is not necessary, and OPEC+ did not change the 2022 oil demand forecast in the last monthly report."

Researcher Shim predicted, "There seems to be no significant change in the demand forecast, and OPEC+ is expected to maintain the daily production increase scale of 400,000 barrels in April as well."

[Image source=Yonhap News]

Researcher Shim also expected that international oil prices will continue to fluctuate this week depending on news related to the Russia-Ukraine war. He said, "Western countries have implemented weapons support for Ukraine and strengthened sanctions against Russia, and Russia has ordered heightened alert status for nuclear weapons operation units. The Russia-Ukraine issue is still ongoing," adding, "Considering that Russia and Ukraine are scheduled to hold talks on the 28th (local time), oil prices will fluctuate depending on the outcome of the talks."

Due to Russia's invasion of Ukraine, international oil prices surpassed $100 per barrel on the 27th. In Seoul, at one of the cheapest places, Seoul Mannam Plaza Discount Gas Station, vehicles are lined up in long queues to refuel. Photo by Dongju Yoon doso7@

Last week, international oil prices showed high volatility, surging on news of Russia's attack on Ukraine. Brent crude reached $105 per barrel intraday on the 24th, when news of Russia's invasion of Ukraine was reported. This was the first time in eight years since 2014. West Texas Intermediate (WTI) also surpassed $100 per barrel for the first time since 2014 on the same day. Brent and WTI closed last week at $97.93 and $91.59 respectively.

This week (28th), Brent crude traded at $103.06, up 5.24%, and WTI surged 6.27% to $97.33. Experts expect international oil prices to rise to between $120 and $150 depending on the situation. Consulting firm Rystad Energy predicted that if the war situation worsens, international oil prices could rise to $130, while JP Morgan Chase forecasted $120.

Hwang Sung-hyun, a researcher at Eugene Investment & Securities, also analyzed, "Current oil prices are reflecting concerns that sanctions on Russian oil and gas exports will continue," adding, "The volume of Russian oil exports is about 150 million barrels, which can have a long-term impact on global oil inventories."

Researcher Hwang predicted, "If sanctions on Russian oil are realized, oil inventories will decrease by 300 million barrels, and international oil prices could reach an average of $110 per barrel," adding, "Depending on speculative buying positions and macroeconomic environment, the upper limit could open up to $150 per barrel."

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