The Group of Seven is putting pressure on OPEC to change course and produce more oil to tame the unrelentingly high crude prices that are pushing fuel costs to record highs.
OPEC+, which includes nonmember Russia, has committed to raising output modestly for consecutive months, but the cartel, and the Saudis, too, have concluded the market is balanced and declined to be more aggressive.
NO OIL PRICE RELIEF: SAUDIS SEE MARKET ‘IN BALANCE’ AND WON’T BOOST PRODUCTION
G-7 energy and environment ministers, who met in Germany this week, said Friday, however, the market has tightened and needs more oil.
“Recent events have also given rise to significant risks to the energy supply security of G7 countries and beyond,” the group said in a final “communique” detailing its assessment of markets and energy policy. “We call on oil and gas producing countries to act in a responsible manner and to respond to tightening international markets, noting that Opec has a key role to play.”
Prince Faisal bin Farhan, Saudi Arabia’s foreign minister, reinforced this week during an appearance at the World Economic Forum that he doesn’t see a larger role for the kingdom, while OPEC+ said following its recent ministerial meeting that supply shortages are not the problem and that “current volatility is not caused by fundamentals but by ongoing geopolitical developments.”
“It’s much more complex than just bringing barrels to the market,” Faisal said. “Our assessment is that actually oil supply right now is relatively in balance.”
Other Saudi leaders, along with some industry leaders in the United States, have blamed the high prices on a shortage of global refining capacity. Capacity fell by about 3 million barrels per day during calendar years 2020 and 2021, according to ClearView Energy Partners.
At the same time, the Biden administration has urged domestic producers to do their part in raising production levels since the war in Ukraine began, and production has been rising, while the British government is also supporting increased production in the North Sea.
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The G-7 consists of the U.S., United Kingdom, France, Germany, Italy, Japan, and Canada.
The U.S. national average gasoline price reached a new record of $4.60 per gallon on Thursday. Fuel prices in the U.K. also reached new record highs on Wednesday.
