OPEC+ raises monthly output and warns of Ukraine fallout

OPEC and its non-OPEC partners on Thursday agreed to raise the oil production group’s output targets by 432,000 barrels per day starting 1st of May, approving a modest monthly increase that it said was in line with consensus on a well-balanced market.

“Following the conclusion of the 27th OPEC and non-OPEC Ministerial Meeting … it was noted that continuing oil market fundamentals and the consensus on the outlook pointed to a well-balanced market, and that current volatility is not caused by fundamentals, but by ongoing geopolitical developments,” OPEC+ said in a statement following the meeting on Thursday.

The group has been pursuing a strategy of gradually reopening the taps, which it reaffirmed on Thursday. The decision came on the same day as reports that the US is considering the largest ever draw from its emergency oil reserve.

The group also reiterated the critical importance of adhering to the full conformity with its compensation mechanism and the extension of the compensation period until the end of June 2022.

The decision on output increase came as OPEC+ warned that the global economy would see a major blow from a prolonged conflict in Ukraine.

“Consumer and business sentiment is expected to decline not only in Europe, but also in the rest of the world, when only accounting for the inflationary impact the conflict has already caused,” the group said in an internal report, seen and quoted by Reuters.