By Alex Lawler and Ahmad Ghaddar
LONDON (Reuters) – Saudi Arabia on Tuesday reaffirmed its commitment to an OPEC+ deal with Russia on oil markets despite widening sanctions on Moscow and global outrage over its military assault on Ukraine. .
The Organization of the Petroleum Exporting Countries and its Russia-led allies – a group known as OPEC+ – reversed historic output cuts they instituted in 2020 after the pandemic caused an unprecedented drop of global demand.
Then former US President Donald Trump stepped in to encourage Riyadh and Moscow to end a price war and work together to shore up the oil market.
Oil prices hit their highest level in more than seven years this week on tight supplies and disruptions to Russia’s crude exports caused by sweeping sanctions against Moscow.
Members of the International Energy Agency (IEA), who met on Tuesday to discuss the Ukraine crisis, agreed to release 60 million barrels of oil from strategic reserves.
The United States would like to see OPEC+ increase production faster than it has since August.
Only a few countries have spare capacity, including Saudi Arabia, the de facto leader of OPEC, and the United Arab Emirates (UAE), its Gulf neighbor.
So far, Riyadh has resisted calls from the United States to increase production faster than expected under the OPEC+ deal.
At its last meeting on Feb. 2, OPEC+ agreed to increase production by 400,000 barrels per day (bpd) for March, leaving it with another 2.6 million bpd of cuts to unwind by the end of March. end of September.
The Saudi cabinet on Tuesday reaffirmed its commitment to the OPEC+ deal, which calls for monthly increases of 400,000 bpd, the Saudi Press Agency reported.
Russian President Vladimir Putin met with Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed al-Nahyan on Tuesday, during which they discussed the OPEC+ deal and pledged to continue market coordination global energy markets, Russian and Emirati news agencies reported.
Four OPEC+ sources told Reuters on Tuesday that the group would likely agree to another 400,000 bpd increase for April when it meets on Wednesday despite events in Ukraine.
The sources said Russia’s invasion of Ukraine – which it calls a “special operation” – had so far had no impact on the operation of the supply deal.
The United Arab Emirates, a close ally of the United States in the Middle East, abstained in the February 25 vote on a draft United Nations Security Council resolution deploring Moscow’s actions.
A diplomatic adviser to the UAE president said it was to encourage a political solution and that taking sides would only encourage violence.
A technical committee meeting of the OPEC+ alliance convened on Tuesday to assess the latest fundamentals.
A report prepared for the committee and seen by Reuters showed that OPEC+ had revised down its oil market surplus forecast for this year from around 200,000 bpd to 1.1 million bpd in its forecast scenario. based.
The report did not assess the market impact of potential major disruptions to Russian oil supply due to the sanctions.
The United States is a key ally of Saudi Arabia, but US President Joe Biden rocked relations last year when he authorized the release of an unclassified US intelligence report into the murder of Saudi journalist Jamal Khashoggi in 2018.
(Additional reporting by Maha El Dahan in DubaiEditing by Louise Heavens and Mark Potter)