OPEC+ to Discuss Output Agreement

Oil-producing alliance OPEC+ will meet today to discuss its production agreement and a possible hike in output amidst rising Western calls for a faster increase to lower surging prices. Ahead of the OPEC+ meeting, oil prices fell on Thursday in anticipation that Saudi Arabia may agree to increase production. Brent crude was down US$2.08, or 1.8 %, at US$114.21 a barrel at 04.10 GMT. US West Texas Intermediate crude dropped US$2.25, or 2.0 % to US$113.01 a barrel, after a 0.5 % rise on Wednesday.

Meanwhile, two OPEC+ sources told Reuters on Thursday that OPEC+ is working on compensating for a drop in Russian oil output, as Russia's production has fallen by around 1 million barrels per day in recent months as a result of Western sanctions on Moscow over Ukraine. One OPEC+ source familiar with the Russian position said Moscow could agree to other producers compensating for its lower output but it may not happen at a Thursday meeting and might not be in full.

A GCC OPEC+ source told Reuters that a decision on the matter was "highly possible" at a meeting on Thursday. Another Reuters report published on Wednesday, however, stated that OPEC+ is set to stick to its modest monthly increases in oil output agreed upon last year at its meeting on June 2 amid a tighter oil market. The report also added that OPEC+ is expected to raise July output targets by 432,000 barrels per day. The oil market has been impacted by the increasing Western sanctions on Russia, resulting in volatility in oil prices.

On Tuesday, Saudi Arabia and Russia praised the level of cooperation inside OPEC+ after Russian Foreign Minister Sergei Lavrov met Saudi counterpart Prince Faisal bin Farhan Al Saud in Riyadh. The Russian ministry issued these comments at a time when several western media outlets reported that some of the OPEC+ members are seriously considering removing Russia from the alliance.