likely to maintain slow oil output despite high prices

Oil prices have reached their highest level since 2014, and crude oil importing countries are feeling the pain. However, despite diplomatic pressure, OPEC and its allies are unlikely to decide to open the taps during Thursday’s oil cartel meeting.

That likely means persistently high energy prices through the end of this year and possibly through 2022, analysts say.

“For now, we still expect OPEC + members to remain in favor of keeping the oil markets tense and taking advantage of the increased prices to improve the financial balance,” wrote Edward Bell, Senior Director of Market Economics at Dubai-based Bank Emirates NBD, in a note Wednesday.

President Joe Biden clearly blamed OPEC + ‘s reluctance to produce more oil to be responsible for the sharp rise in energy prices in the US and around the world.

“The idea that Russia and Saudi Arabia and other large producers will no longer pump oil so that people have gasoline to get to and from work, for example, is incorrect,” Biden said at the G20 meeting on Sunday in Rome, Italy.

Japan and India have also joined the US to put pressure on OPEC to raise its production limits and help lower energy prices.

However, the group’s August policy of gradually increasing oil production by 400,000 barrels a day a month has so far been perfectly fine for OPEC members and their allies, including Russia. The program “works well and there is no reason to deviate from it,” Angola’s oil minister Diamantino Pedro Azevedo said on Sunday.

Kuwait also said Monday that the organization should stick to its current plan as oil markets are “balanced” and OPEC counterparts Iraq, Nigeria and Algeria have made similar statements.

To the consumer, things don’t feel balanced. Brent crude hit more than $ 86 a barrel in late October, a three-year high, and is up more than 60% this year alone. It fell in the days leading up to the OPEC meeting, traded at $ 81.86 a barrel on Thursday at 7:20 a.m. in London.

West Texas Intermediate is up more than 70% this year, hitting its highest level in seven years, recently hitting $ 85 a barrel, despite trading at $ 80.44 a barrel in London on Thursday at the same time. American gasoline is also at a seven-year high.

For OPEC + ministers, caution is the word of the month, said Herman Wang, senior oil writer at S&P Platts.

“Despite pressure from the US, India and Japan to release more crude oil, we have heard from many ministers that they quoted Covid-19 rates and the expected seasonal decline in oil demand as soon as the calendar warranted a more conservative approach and adhered to theirs Hold on to plans, “Wang told CNBC.

“The price hike may very well be temporary, but until the market cools down, OPEC + can expect many more complaints from its key customers.”

Frustrated oil importers can’t do much to force the hand of OPEC, either – the US could use crude oil from its strategic oil reserves to drive down prices, Bell wrote. But that’s a dramatic move typically mistaken for emergencies like natural disasters or wars, and the US’s demand that OPEC countries pump more oil also goes against its supposed goal of being a world leader in climate policy.

As a result of all of this, Bell wrote, “We remain of the opinion that oil prices will remain high through the end of 2021 and are likely to bleed into early next year.”