Oil prices fell on Thursday on reports that OPEC could start to pump more crude to make up for a drop in Russian production caused by Western sanctions.
The Wall Street Journal reported Tuesday that some members of the oil exporters’ cartel were exploring the idea of suspending the OPEC+ supply agreement with Russia. This would allow countries such as Saudi Arabia and the United Arab Emirates to step in and ease a supply crunch that pushed global crude prices above $120 a barrel this week.
Saudi Arabia, OPEC’s de-facto leader, had indicated to Western allies that it was prepared to raise its oil production if Russian output fell substantially as a consequence of the sanctions imposed over the invasion of Ukraine in February, the Financial Times reported. An agreement could come as early as Thursday at a meeting of OPEC and Russian energy ministers, according to Reuters.
Saudi Arabia had previously dismissed US requests to increase production beyond a long standing quota agreed with Russia and other non-OPEC producers. But concerns that sky-high prices could tip the world into recession appear to be prompting a rethink.
Brent crude, the global benchmark for oil, hit $125 a barrel on Tuesday, its highest level since early March. US WTI oil almost reached $120 per barrel. Both have since dropped back in response to the media reports, with Brent dipping another 2.3% below $114 and WTI down 1.9% at $113 by 5 a.m. ET.