The Saudi-led OPEC and its allies in the Moscow-led OPEC Plus, maintained their strategy of slightly increasing oil production, despite Western pressure to end the price volatility, as the war in Ukraine rocked the market.
The Organization of Petroleum Exporting Countries said in a statement on Thursday that it would boost output by 432,000 barrels per day in May, compared to 400,000 barrels a day during the previous months.
The coalition stated that the “modification” in production output was due to technical reasons.
At about 12:30 GMT, Brent North Sea crude was down 5.08 percent to $107.69 a barrel, while West Texas Intermediate crude fell 5.43 percent to $101.96, affected by press information about possible plans for massive withdrawals from American strategic reserves.
“It’s a sentiment shock, but if recent history suggests anything the reserve release will only be a temporary fix and akin to putting a band-aid on a broken leg,” said Stephen Innes, Managing Partner at SPI Asset Management.
The recent fall in prices has made it “even less likely” that OPEC+ will decide to step up production, said Carsten Fritsch, analyst at Commerzbank.
The White House was expected to announce a plan to release a million barrels a day for several months -- totaling up to 180 million, according to Bloomberg News.
“If such a gigantic release of emergency reserves actually happens, the oil market would no longer be undersupplied in the second quarter,” Fritsch said, adding that it would even be oversupplied in the third quarter.
For his part, Saudi Energy Minister Prince Abdulaziz bin Salman reiterated on Tuesday his commitment to OPEC Plus, saying that without this agreement, there would be no stability in the energy market, and “price volatility will worsen.”
