The outbreak of the Russian-Ukrainian war sent global oil prices soaring, surpassing the $100 a barrel mark for the first time in eight years. But until May, the OPEC+ group, which includes Russia, refused to raise output to lower prices. The BBC published an article on May 6 to interpret this.
When oil prices were particularly low in 2016, OPEC joined forces with 10 non-OPEC producers to create OPEC+. OPEC+ includes 23 oil exporters, including Russia, which produces more than 10 million barrels per day. OPEC+, which together produces about 40% of the world‘s crude oil, meets monthly in Vienna to decide how much to put on the market.
The BBC said that US President Biden and British Prime Minister Johnson have repeatedly asked Saudi Arabia and the United Arab Emirates, which have spare capacity, to increase production, but both have been rejected. The reason is that to increase production, OPEC+ must respect the wishes of Russia, because Russia is the two largest in the alliance. one of the members. The rise in oil prices is quite beneficial to Russia as a buffer against international sanctions.
As for other OPEC+ members, such as Nigeria and Angola, it is difficult to increase oil production because of the decline in international investment due to the CCP virus epidemic, and these countries are difficult to maintain their oil facilities and achieve full capacity.
The BBC said that since China’s economy relies heavily on imported crude oil, rising oil prices have pushed up China’s import costs, which are transmitted to the end through the industrial chain, and push up inflation, affecting all aspects of the economy.