OPEC and its allies such as Russia (OPEC+) have stuck to agreed plans to raise production by another 400,000 barrels per day in March.
Despite suggestions from investment bank Goldman Sachs that the group would bring forward additional hikes in supplies, it has remained committed to agreements made in July to gradually replace lost output from the start of the pandemic.
Calls from the world’s biggest oil consumers such as US, India and Japan to boost production further have also fallen on deaf ears.
While the targets remain more conservative than some analysts suggested, the organisation is still effectively raising output for the eight consecutive month.
This is will be a challenge for multiple OPEC members, who have already been failing to keep up with previously agreed increases in quotas.
The group’s joint technical committee recently revealed that OPEC+ production was 824,000 barrels a day lower than its target by the end of December,
Meanwhile, IEA reported that OPEC+ managed to increase output by only 250,000 barrels per day, after Nigeria, Angola and Malaysia all underproduced.
Russia has also pumped less than its quota for the first time since the 2020 cuts were introduced.
Market conditions of tightened supplies, rebounding demand, and production difficulties have contributed to a historic rally across both major benchmarks.
Brent Crude reported seven year highs above $90 per barrel last week, and is currently priced at $89.28, while WTI Crude remains at $88.20.
Craig Erlam senior markets analyst at OANDA, told City A.M. that pledged targets are unlikely to effect prices significantly.
He said: “It is unclear how much of a difference any large increase would make, as OPEC currently can’t hit its targets. Even Russia appears to be falling short. As it stands, monthly production increases have been priced in to the market. Oil is currently around $90 and conversations continue about $100 prices. It could remain within this range unless there are fundamental changes.”
OPEC+ will hold its next meeting on 2 March 2022.