However, members of the OPEC Plus group, including Russia, do not appear to be interested in helping.
What is OPEC Plus?
OPEC Plus is actually a group of 23 oil exporting countries whose member countries meet every month in Vienna to decide how much oil they should have in the world market.
The 13 main member states of the Organization of the Petroleum Exporting Countries (OPEC) are actually the countries of the Middle East and Africa. The organization was established in 1960 to find solutions to problems around the world in terms of oil supply and its price.
Today, OPEC produces 30% of the world's crude oil, or 28 million barrels per day. Saudi Arabia is the largest oil producer in OPEC, producing 10 million barrels a day.
In 2016, when oil prices were significantly lower, the OPEC group decided to partner with 10 other oil-producing countries, thus creating OPEC Plus.
These countries include Russia, which produces 10 million barrels of oil per day. Overall, these countries produce 40% of the world's crude oil.
Kate Dorian of the Energy Institute says that OPEC Plus is actually trying to balance the market by changing supply and demand. When the demand for oil decreases, they reduce the supply of oil so that the prices remain high.
OPEC Plus countries could also supply more oil to the market to bring down prices, and major importers such as the United Kingdom and the United States are awaiting the same decision.
What is the reason for such a sharp rise in oil prices?
In the spring of 2020, when the spread of cod was on the rise worldwide and various countries were in lockdown, crude oil prices fell sharply as demand fell sharply.
Commenting on this, Dorian said that "oil producing countries were paying people to supply oil because they did not have space to store it."
The OPEC Plus countries then agreed to reduce oil production by 10 million barrels per day to bring prices back to normal.
In June 2021, when the demand for crude oil began to rise again, OPEC Plus began to gradually increase the supply of oil and began to supply an additional four million barrels to world markets.
Today, they are supplying 2.5 million barrels less oil per day than they were supplying in the spring of 2020.
However, when Russia invaded Ukraine, crude oil prices began to rise sharply, reaching $ 100 a barrel.
This has led to a significant increase in petrol prices at the pumps for the general consumers. "When OPEC Plus cut oil supplies by 10 million barrels per day in May 2020, it was a huge reduction," says David Fife, chief economist at Argus Media.
"Now they have increased oil supplies so slowly that the consequences of the crisis caused by the Russia-Ukraine conflict have not been considered."
Fife says oil buyers fear that the European Union, like the United States, could ban oil imports from Russia.
Europe currently imports 2.5 million barrels of oil per day from Russia.
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| "The threat of a ban on Russian oil has raised concerns in the markets, which could lead to a sharp drop in oil supplies," Fife said. |
Why is OPEC Plus not increasing oil production?
US President Joe Biden has repeatedly called on Saudi Arabia to increase oil production, but Saudi Arabia has so far failed to do so.
British Prime Minister Boris Johnson has also called on Saudi Arabia and the United Arab Emirates to increase oil production. However, their words were not heeded.
"Saudi Arabia and the United Arab Emirates have the potential to produce more oil, but they are refusing to increase production on their own," said Kate Dorian. They do not want to be obeyed by the West. "
"The gap between supply and demand is narrowing, and the current high oil prices are a reflection of the panic among oil buyers," he said.
Other OPEC Plus countries are finding it difficult to increase oil production.
Dr Fife says oil-producing countries such as Nigeria and Angola have been delivering less than a million barrels a day for the past year.
"During the global epidemic, investment declined and the oil-producing industries were neglected. Now they know they can't increase production. "
What is Russia's position?
OPEC Plus also has to respect Russia's wishes, as Russia is one of the two major partners in the alliance.
"Russia is happy with current oil prices," said Carol Nakhla, CEO of Crystal Energy. There seems to be no harm in lowering its prices.
OPEC wants to have good relations with Russia, so it will uphold the agreement reached last year. This means that from now until September, the supply of crude oil will gradually increase.
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