The oil price falls with the prospect that OPEC will compensate for Russian production losses

LONDON, June 2 (Reuters) – Oil prices fell on Thursday after speculation that Saudi Arabia and other OPEC members could increase oil production to compensate for a fall in Russian production.

Brent oil was down $ 2.82, or 2.4%, to $ 113.47 a barrel at 1035 GMT, after rising 0.6% the day before.

US West Texas Intermediate (WTI) oil fell $ 2.81, or 2.4%, to $ 112.45 a barrel, after rising 0.5% on Wednesday.

The benchmark indices have been rising higher for several weeks as Russian exports have been pressured by US and EU sanctions against Moscow over the invasion of Ukraine, which Moscow calls a “special operation”. read more

The market has also seen support from China’s gradual emergence from strict COVID-19 barriers.

But oil prices fell on Thursday ahead of a meeting between the Organization of the Petroleum Exporting Countries and allies including Russia, known as OPEC +, where the group will decide on an oil production policy for July.

Saudi Arabia and other OPEC members could increase oil production to compensate for a fall in Russian production, two OPEC + sources said on Thursday.

Russian production has fallen by around 1 million barrels per day (bpd) due to sanctions.

An OPEC + source familiar with the Russian position said that Moscow could agree that other producers increase production to compensate for the lower production, but not necessarily cover the entire deficit.

The Kremlin maintains that it can redirect oil exports to minimize losses from EU sanctions, but analysts remain skeptical. read more

“However, the extent to which this will prove achievable is doubtful. Russian oil production will therefore likely fall again in the coming months,” said Commerzbank analyst Carsten Fritsch, who also questioned OPEC +’s ability to supply significantly more oil to the market. . .

As recently as Wednesday, sources expected OPEC + to stick to its modest monthly increases in oil production, despite tighter global markets. read more

A technical committee in OPEC + trimmed the forecast for the oil market surplus in 2022 by around 500,000 bpd to 1.4 million bpd, said two OPEC + sources.

The Wall Street Journal reported on Tuesday that some OPEC members were considering suspending Russia from the agreed production plan, to allow other producers to pump significantly more crude oil, as the United States and European nations wanted.

But two OPEC + sources told Reuters that a technical meeting on Wednesday had not discussed the idea. Six other OPEC + delegates said the idea was not discussed by the group. read more

Additional reporting by Yuka Obayashi in Tokyo; editing by Jason Neely

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