This morning Brent crude oil reached a new peak as it hit a seven-year high. New problems with supply combining with old problems are creating a mix that is making it hard for oil prices to retreat. Along with political tensions in the East, some OPEC members are falling short of production output, contributing to the rising price of oil.
As we noted in a recent article this week, “Ukraine Border Situation Intensifies,” the problems going on in Russia and Ukraine are not the only causes for concern when it comes to the market and how prices are reacting. Over the past few months, we have seen political tensions, COVID-19, natural disasters, and much more contribute to the volatility of the market, but now it is time to shift some focus to members of OPEC and their production output. Russia specifically, regardless of the situation on the border, has fallen short of their production quotas. This was the first time Russia had not met their quota since the record cuts were enforced.
With production outages or slowdowns from major contributors such as Russia, the 400,000 barrel per day (bpd) OPEC pledge is in a tough state. With outages and production slowdowns in major counties such as Russia, Nigeria, and Iraq, the rest of OPEC+ is only able to produce about 60% of the contributed total amount to 400,000 bpd, according to IEA data. With the start of 2022 not being as positive as one might have hoped for, there is still time left to see if markets will rebound from the rising prices and if production will be increased in the coming months.