A top Russian official said Wednesday that Russian and Middle Eastern energy producers will continue to ignore the Biden administration’s pleas for increased output.
Deputy Prime Minister Alexander Novak argued that the Organization of the Petroleum Exporting Countries and Russia, collectively known as OPEC+, have chosen to stay with previous plans to ensure market stability. While the U.S. has implored the group of nations to change those plans and produce more crude oil and natural gas many times in the last several months, the calls have largely been ignored.
“We believe that it would be right for the market to show in the mid-term how we will increase production as demand grows,” Novak said in an interview Wednesday. “The producing companies should understand beforehand which investments they have to plan in order to ensure a production increase.”
Oil and natural gas prices have spiked in the U.S. and Europe as OPEC+ has remained steadfast in its steady output plan. The increasing costs have contributed to higher gasoline prices at pumps worldwide and an energy crisis in Europe and Asia.
Throughout the summer and fall, top White House officials have pleaded with OPEC+ to increase exports as costs rise for consumers.
In November, President Joe Biden released 50 million barrels from the U.S. stockpile of crude oil in a coordinated action with several allies including the U.K. and South Korea. The release was meant to increase the global supply of oil and decrease consumer prices at the pump.
Industry experts doubt the plan and say it would likely be ineffective. The price of oil worldwide surged after the White House announced the action.
On Wednesday, Novak added that the release of oil from nations’ strategic petroleum reserves, an action seen also as a retaliation for the refusal of OPEC+ to increase output, would only have a short-term impact. Oil prices are estimated to stay between $65-80 per barrel, he said.
The cost of oil stayed up at about $76 per barrel in the U.S. and $79 per barrel in Europe on Wednesday. Global demand for oil is expected to increase to 104.1 million barrels per day by 2026, according to an International Energy Agency forecast.
Oil prices fell in November due to the rapid spread of the Omicron variant of COVID-19, but have begun to surge again.