Potentially Huge OPEC Gap: Failed to Make Up for Russian Oil Disruption
April 11, 2022, 9:40 pm
According to OPEC, a loss of Russian oil production as a result of sanctions could result in a supply gap of more than seven million barrels a day. OPEC Secretary General Barkindo explains that it is “almost impossible” to balance this out.
OPEC has declared itself unable to compensate for any loss of Russian oil production as a result of sanctions over the war in Ukraine. The supply gap could reach more than seven million barrels per day (bpd) of oil and other net exports, Organization of Petroleum Exporting Countries Secretary-General Mohammed Barkindo told a meeting with EU officials from according to a transcript of the speech. “Given the current demand outlook, it would be nearly impossible to replace a loss of volume of this magnitude,” read the text, which the Reuters news agency saw. The barrel is the most common unit of measurement for crude oil and describes a historic barrel of 159 liters.
Current market volatility is a result of factors beyond OPEC’s control, the text continues. This formulation is taken as a sign that the cartel will not increase its production. However, the EU requested a corresponding examination at the meeting in Vienna, Reuters learned from EU circles. Russian oil is currently not subject to EU sanctions, but is being considered as part of another sanctions package. Australia, Canada and the US, on the other hand, have already banned such purchases.
The International Energy Agency (IEA) estimated in mid-March that Russian oil supplies could drop by 3 million bpd from April. As of April 6, the drop was 0.6 million bpd after an average production of 11 million bpd in March. OPEC rejected US and IEA requests to increase its own production. Oil prices hit their highest level in 14 years last month. Dialogues between the EU and OPEC have been ongoing since 2005.