OPEC+ decided not to change the production quotas for its members at its latest meeting, which took place on Sunday.
The group had agreed in November to reduce these quotas by a combined 2 million bpd, which amounted to an effective production cut of 1 million bpd in response to a weaker economic outlook.
The decision drew the ire of the Biden administration, which had repeatedly asked the de-facto leader of OPEC, Saudi Arabia, to boost oil production as it struggled to reduce retail fuel prices.
Now, the decision to keep production capped comes at the same time as the start date of an EU embargo on Russian crude plus a price cap supported by the G7 and Australia.
While OPEC+ officials said, per Reuters, that the price cap on Russian oil was not discussed at the meeting, analysts have noted that OPEC has cause for concern with regard to the price cap as it considers it a weapon that could someday be used against it.
“The decision reflects the unpredictability of supply and demand in coming months,” said an ANZ analyst about the OPEC+ decision, as quoted by Reuters.
Perhaps more importantly, however, OPEC+ agreed to schedule its next meeting for February and the one after that for June. Until now, OPEC+ has been meeting every month to coordinate production.
If meetings are going to be sparser from now on, that would suggest the current policy is going to stick: the quota cap was originally planned to remain in place until the end of 2021.
Meanwhile, prices are responding as expected to the OPEC+ decision, helped by continuing Covid restriction relaxation in China. At the time of writing both Brent crude and West Texas Intermediate were up by more than a percentage point from Friday’s close, although both remained far below $90 per barrel.