The International Energy Agency on March 18 urged OPEC+ countries to boost output, while Japan's prime minister held what his office called "an intense discussion" on oil prices with Saudi Arabia's crown prince, as international pressure grows for a Middle East response to the Russian supply crunch.
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Saying the market was "really disappointed" by the OPEC+ alliance's lack of urgency to offset the market's tightness at its last meeting March 2, IEA Executive Director Fatih Birol said he hoped the producer group would act more favorably when it reconvenes March 31.
"I very much hope the meeting on March 31 will come up with some good messages which would help to relieve the strain in the oil markets," he said. "Many of the key oil producing countries have in the past again and again proven that they were responsible players in the energy markets when it comes to such difficulties and I very much hope that once again they will be on the right side here."
The group, consisting of OPEC, Russia and several other allies, has been gradually rolling back the record production cuts it instituted during the market crash of 2020 in 400,000 b/d monthly increments, but the US, India, Japan and other crude customers have criticized the pace as far too slow.
Birol said the global oil market faced a 2.5 million b/d supply shortfall as a result of the Ukraine crisis, echoing an earlier IEA estimate that Russian production could fall by 3 million b/d from April, with crude exports falling by 1.5 million b/d and oil product exports by 1 million b/d.
Western sanctions, which have targeted Russia's financial sector, have led to many traders avoiding transacting in Russian commodities or with Russian counterparties, tightening the oil market and driving up global prices in a scramble for alternative supplies.
The Platts Dated Brent benchmark was assessed at $113.71/b on March 17, down from the 14-year peak of more than $137/b seen earlier in the month, but still high enough to jeopardize the world's economy, many consuming countries have said.
But Saudi Arabia, the UAE and other members have for months said the surge in oil prices was a geopolitical problem that they are not responsible for. They have also sought not to upset OPEC's delicate relationship with Russia, that now spans more than five years of coordinated production quotas and has forged trade, security and other ties.
In addition, OPEC is awaiting the outcome of Iran nuclear deal talks, which appear back on track and close to a final agreement. Sanctions relief on Iran could unlock some 1.5 million b/d of Iranian oil and condensate exports within a year, according to S&P Global Commodity Insights analysts.
Japanese Prime Minister Fumio Kishida, whose country is also an IEA member, became the latest world leader to put pressure on Saudi Arabia for a production increase in a March 17 call with Crown Prince Mohammed bin Salman.
The two "had an intense discussion on countermeasures against oil price increases," the Japanese foreign ministry said in a statement, adding that Kishida had "expressed his strong hopes for Saudi Arabia to show leadership in stabilizing the international oil market, and they concurred on deepening the cooperation toward the stabilization of the oil market and carbon neutral era."
The prince, however, reiterated Saudi Arabia's support for OPEC's alliance with Russia and other key oil producers, the official Saudi Press Agency said.
Bin Salman, the de facto leader of the kingdom, expressed his country's "keenness to maintain the oil market's balance and stability, noting the role of the OPEC+ agreement in this regard and the importance of maintaining it," according to the SPA report.
The call came a day after UK Prime Minister Boris Johnson visited both Saudi Arabia and the UAE to lobby for more oil supplies to offset the impact of Western sanctions on Russia, though neither OPEC member publicly committed to increase their production. Johnson, in a statement after the trip, said that the global community needed to "work together to improve energy security and reduce reliance on Russian hydrocarbons."
US Secretary of State Anthony Blinken is also reportedly due to make a trip to Riyadh in the near future.
Saudi Arabia and the UAE are essentially OPEC's only members with spare production capacity available to help ease the supply crunch caused by the sanctions, though not entirely.
S&P Global estimates that by May, Saudi Arabia will hold just under 1 million b/d of additional production upside, while the UAE will hold about 755,000 b/d. Every other OPEC member will be effectively maxed out, and several are plagued by severe instability in their oil production.