The United States wants to see the world producing more crude oil, including OPEC members. This is what a State Department official said on the sidelines of CERAWeek, noting that the global economy is recovering and more supply is necessary to meet demand.
“As world economies recover, we’ll see more consumption. And therefore we’d like to see supply meet demand,” Jose Fernandez, Undersecretary of State for Economic Affairs, Energy and the Environment, said, as quoted by the AFP.
He then went on to add that this included output from OPEC+, which last year agreed to slash production by around 1 million bpd and has signaled it has no immediate plans to reconsider that agreement.
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, they 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 to counter the price rally, which caused a spike in retail fuel prices – a move that prompted various reactions from experts.
Now, the 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 quoting one attendee, both executives and OPEC officials were 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.