OPEC+ may need to boost oil production to keep market from overheating, Kazakhstan says

A 3D printed oil pump jack is seen in front of the OPEC logo in this illustration image, April 14, 2020. REUTERS/Dado Ruvic/File Photo

NUR-SULTAN/LONDON, Aug 3 (Reuters) – OPEC+ may need to boost oil output to avoid overheating the market, OPEC+ member Kazakhstan said on Wednesday, as the group of oil producers meets under pressure from the United States to add barrels to the market while most members have already exhausted their production potential.

“We’ve always said the preferred price corridor is $60 to $80 a barrel. Today the price is $100. So we may have to increase production to avoid overheating,” he told reporters. Kazakh Energy Minister Bolat Akchulakov.

The market largely expected OPEC+ to hold production steady or opt for a slight increase. Three OPEC+ sources said on Wednesday they still saw little chance of a shift in production policy when commenting on the Kazakh minister’s statement.

The United States has pressured OPEC leaders Saudi Arabia and the United Arab Emirates to pump more oil to rein in prices, boosted by the rebound in demand and the invasion of Ukraine via Moscow.

US and Western sanctions on Russia have driven up the prices of all types of energy, driving inflation to multi-decade highs and hikes in central bank interest rates.

OPEC has increased production in line with its targets of around 430,000 to 650,000 barrels per day per month in recent months and has refused to move on to larger production increases.

Group sources cited a lack of spare capacity among members to add more barrels as well as the need for continued cooperation with Russia as part of the expanded OPEC+ group.

“OPEC+ looks unlikely to do anything when it meets later today,” Investec’s Callum Macpherson said, citing growing concerns over a slowing global economy and lack of reserve capacities.

“OPEC+ is struggling to reach the levels to which its production limits have now been raised,” he said, adding that a surprise decision to increase production would put further pressure on oil to it falls below $100 a barrel.

Benchmark Brent oil futures fell more than $1 on Wednesday to trade just above $99 a barrel.

Wednesday’s meeting will discuss production policies from September and possibly from 11:30 GMT.

In September, OPEC+ was supposed to have ended all record production cuts it implemented in 2020 after the pandemic reduced demand.

In June, however, OPEC+ was nearly 3 million barrels a day below its quotas as sanctions imposed on some members and weak investment by others crippled its ability to increase production. Read more

Only Saudi Arabia and the United Arab Emirates would still have spare capacity to increase production.

French President Emmanuel Macron said he had been told that Saudi Arabia and the United Arab Emirates had very limited ability to increase oil production. Read more

Additional reporting by Alex Lawler, Tamara Vaal and Mariya Gordeyeva; editing by Jason Neely

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