The United States wants to see the world producing more crude oil, including OPEC members, arguing that the global economy is recovering and more supply is necessary to meet demand.
The message was delivered by Undersecretary of State for Economic Affairs, Energy and the Environment, Jose Fernandez on the sidelines of CERAWeek, which is an annual energy conference organized by the information and insights company S&P Global in Houston, Texas.
AFP quoted Fernandez as saying, “as world economies recover, we’ll see more consumption. And therefore we’d like to see supply meet demand.”
He decried the fact that output from OPEC+ last year was slash by around one million barrels per day (bpd) with the oil cartel signaling that it has no immediate plans to reconsider the agreement cutting production. The AFP report notes that although oil prices have retreated from highs reached last year in the first months after Russia’s invasion of Ukraine, prices are still quite a bit higher than they were before the pandemic.
The Biden administration released close to 200 million barrels from the strategic petroleum reserve (SPR) to counter the price rally, which caused a spike in retail fuel prices – a move that prompted various reactions from experts.
At present America’s SPR is at 40-year lows and needs to be replenished but prices are too high for the U.S. federal government. The bigger and more global problem, however, is spare production capacity.
This capacity was among the issues that U.S. energy executives and OPEC delegates discussed on the first day of CERAWeek. According to a Reuters report both executives and OPEC officials are concerned about spare oil production capacity and its sufficiency to meet growing oil demand.
Some analysts have forecast that the global oil market will swing into a deficit in the second half of the year, driven by China’s recovery, which will push global demand higher while supply lags behind.