OPEC won't budge on production cuts

World's top oil producing group OPEC has signalled it would not change its production policy despite calls from the US president to bring more oil to market.

“We read the market. We analyze the supply, demand, away from political considerations, purely on technical, sound technical considerations, and we take the decisions that provide stability in the market,” the cartel’s secretary-general Haitham al-Ghais said, as quoted by Reuters.

Speaking at the India Energy Week, al-Ghais added “If you look at oil, also last year, oil was probably the least volatile commodity, and I think that's greatly down to the decisions and the clarity that we take it (at) OPEC+. So this is our objective. This is what we will keep doing.”

President Donald Trump has called on OPEC to start unwinding its production cuts in order to bring down global oil prices and hasten the end of the Ukraine war. However, these calls have not met with a positive reaction from either OPEC or, indeed, the U.S. oil industry.

OPEC and its partners in OPEC+ plan to start gradually increasing oil production from April—but only if the price is right, as the producers’ group has made clear repeatedly. It seems, however, that the price may not be right, if the U.S. Energy Information Administration is correct in its latest production forecast.

In the February edition of its monthly Short-Term Energy Outlook, the EIA said it expected global hydrocarbon liquids production to rise by 1.9 million barrels daily this year, including from OPEC as it relaxes its cuts. The rest of the increase will come from higher production from non-OPEC countries, the EIA said.

On the other hand, the federal agency also predicted that current OPEC+ cuts will keep a cap on global oil inventories through the first quarter of the year, which could lend some support to prices, potentially motivating a relaxation of the production cuts.