(Bloomberg) -- The OPEC+ producers’ group needs to pump more oil to bridge a gap between supply and demand and to reduce price volatility that’s seen crude skyrocket towards $100 a barrel this year.
Speaking by video link to a conference in Saudi Arabia, one of the leaders of the alliance, International Energy Agency Executive Director Fatih Birol told the group that it’s lagging in meeting output targets and needs to catch up. Prince Abdulaziz bin Salman Al Saud, the Saudi energy minister, is set to speak at the same conference later today in a session that’s closed to media.
“There is a significant difference between the targets that OPEC+ countries set in terms of their production levels and what is produced today,” Birol said, addressing a meeting hosted by the International Energy Forum. “Our latest oil market report shows that this gap is close to 1 million barrels a day.”
The problem for many OPEC+ members is that they aren’t able to bring back the barrels they’ve pledged. The 10 Organization of Petroleum Exporting Countries members that are subject to quotas pumped 23.9 million barrels a day in January, according to IEA data, compared with a target of 24.6 million barrels daily.
Prince Abdulaziz and Russian counterpart Alexander Novak rallied nearly two dozen producers to slash output and rescue the oil market when the coronavirus crushed demand in 2020. Now that economies are reopening and demand is rising, those producers are gradually rolling back the cuts. Rising demand and geopolitical crises have helped push Brent crude 20% higher this year, with prices trading in the $90s.
OPEC Secretary General Mohammad Barkindo said this week that the group is focused on keeping the oil market well-supplied, even as the industry continues to grapple with underinvestment. High prices are hurting many households and could become a drag on economic growth, according to the IEA’s Birol.
“Therefore it is important that OPEC+ countries narrow this gap,” Birol said. They will “hopefully provide more volumes to the market in order to reduce volatility.”
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