IEA Pleas With OPEC+ For More Oil Supply, Again

• For the second time in one week, IEA Director Birol has asked OPEC+ to raise production.
• OPEC and OPEC+ have not been pumping as much as the OPEC+ pact calls for.
• If OPEC+ continues to fail in delivering its oil production targets amid rising demand and inventories at multi-year lows, oil prices will remain under upward pressure.

For a second time this week, Fatih Birol, the executive director of the International Energy Agency (IEA), called on the OPEC+ group on Wednesday to narrow the widening gap between its production quotas and the much lower actual supply to the market.

"It will be important for OPEC+ to narrow this gap and hopefully provide more volumes to the market," Birol said at an energy conference in Riyadh today, as quoted by Reuters.

OPEC and OPEC+ have not been pumping as much as the OPEC+ pact calls for, essentially tightening the market and distorting analyst assumptions about market balances.

For half a year now, OPEC+ has actually added lower volumes to the market each month than the 400,000 bpd nominal monthly increase announced in each of the OPEC+ meetings since August 2021.

Estimates in the International Energy Agency's monthly oil market report for February showed that the gap between OPEC+ production and its target levels surged to as much as 900,000 bpd in January.

Figures from OPEC itself showed last week that the cartel raised its crude oil production by just 64,000 bpd in January 2022, well below the 254,000-bpd increase in output allowed under the OPEC+ deal. According to the secondary sources that OPEC uses to track its members' production, even top producer Saudi Arabia failed to deliver its 110,000-bpd monthly increase. The Kingdom raised its oil production in January by 54,000 bpd to 9.999 million, below its 10.122 billion bpd quota for January per the OPEC+ deal. However, Saudi Arabia self-reported production of 10.145 million for January, up by 123,000 bpd from December.

The plea from the IEA's head Birol on Wednesday comes two days after he said at a Cairo event that OPEC+ producers need to pump more oil to close the gap between nameplate production quotas and actual output.

If OPEC+ continues to fail in delivering its oil production targets amid rising demand and inventories at multi-year lows, oil prices will remain under upward pressure and are set for more volatility, the IEA said in its monthly report published last week.  

By Tsvetana Paraskova for Oilprice.com

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