OPEC+ said they would respond to plans by big oil consumers to release crude oil from their strategic reserves. US President Joe Biden has announced the planned release of 50 million barrels of crude from the US Strategic Petroleum Reserve (SPR) in a coordinated effort with China, Japan, South Korea, and India to curb soaring energy prices. OPEC+ officials said it might have to review plans to raise supply when they meet next week to respond to the “unjustified” release.
Analysts said that OPEC+ might have to delay the planned production increase of 400,000 bpd in January and February to offset inventory releases by its major customers, estimated at more than 60 million barrels. That may not pose challenges to some OPEC+ members which have been struggling to ramp up production, such as Angola, Nigeria, and Malaysia. However, it would come as a blow to other producers, including Russia, which hoped for faster restoration of shut-in production.
OPEC’s largest producer Saudi Arabia could also consider making another voluntary output cut, but the kingdom would likely prefer a united response from its partners. Analysts said OPEC+ resistance to customers’ call for more supply might prove to have been a mistake. If the group met customers’ demand by bringing forward half of the planned supply boost for January, it would probably have been enough to prevent customers from releasing their strategic stockpiles.
