The OPEC group of oil producing countries and its Russia-led allies were expected Thursday to again ignore Western pressure to significantly boost production as the Ukraine conflict has rocked prices.
The 13 members of the Saudi-led Organization of the Petroleum Exporting Countries and 10 countries spearheaded by Russia will likely back a modest increase of 400,000 barrels per day for May, the same amount as in previous months.
Officials began a technical meeting on Thursday that will be followed by a ministerial video conference before an announcement is made, according to a source close to the organization.
"The signals suggest no deviation from the plan in recent months," said Stephen Innes, managing partner at SPI Asset Management.
The United States has urged OPEC+, as the alliance is known, to boost production as high energy prices have contributed to soaring inflation across the world, which has threatened to severely derail the recovery from the Covid pandemic.
Crude prices have spiked over fears of a major supply shortfall after Moscow invaded Ukraine on February 24. Russia is the world's second biggest exporter of oil after Saudi Arabia.
The international benchmark contract, Brent North Sea crude, flirted with a record high in early March as it soared to almost $140 per barrel.
It has retreated since then on hopes that Moscow and Kyiv could agree on a ceasefire, which would ease concerns over Russian supplies. Covid lockdowns in China have also weighed on prices as the country is the world's top crude consumer.
The recent fall in prices has made it "even less likely" that OPEC+ will decide to step up production, said Carsten Fritsch, analyst at Commerzbank.
OPEC+ "is likely to feel that this confirms its view that the upswing in oil prices was driven chiefly by geopolitical risks rather than by any actual shortage of supply," he said.
Oil prices tumbled again on Thursday on reports that the United States is considering tapping its reserves, but they remain above $100 per barrel.
The White House is expected to announce a plan to release a million barrels a day for several months -- totalling up to 180 million, according to Bloomberg News.
"If such a gigantic release of emergency reserves actually happens, the oil market would no longer be undersupplied in the second quarter," Fritsch said, adding that it would even be oversupplied in the third quarter.
But Bjarne Schieldrop, chief commodities analyst at SEB, said the US plan gives OPEC+ "no incentive to lift the production cap more than the planned" increase.
OPEC+ here to stay
The United States, Canada and Britain have decided to ban Russian oil and gas, but the European Union has avoided an embargo as countries such as Germany are highly dependent on imports from Russia.
Berlin and the International Energy Agency, which advises developed countries, have also urged producers to boost production to bring relief to the market.
British Prime Minister Boris Johnson met with oil-rich Saudi Arabia's de facto ruler Crown Prince Mohammed bin Salman to lobby for higher production earlier in March.
But Gulf countries have resisted the pressure.
The United Arab Emirates on Monday urged Western countries to be "reasonable" in their expectations and said the OPEC+ alliance was here "to stay".
OPEC+ drastically cut production in 2020 as oil prices sank due to the pandemic, with the WTI contract, the US benchmark, even crashing into negative territory.
It started to raise production again in August 2021 at its modest rate of 400,000 barrels per day.