Russia slowly inches to crude tap

By Our Special Correspondent

OPEC and allied oil-producing countries decided on Thursday to gradually increase the flows they send to the world, as Europe's plan to sanction Russian oil threatens to divert millions of barrels from a global market already thirsty for crude.

A cautious approach from the OPEC+ bloc - which includes non-member Russia - could further exacerbate the global energy crisis, as prices for oil and its derivatives, gasoline, diesel and aviation fuel, are likely to rise. Those higher prices will worsen global inflation, eroding people's ability to spend money to support economic recovery.

In an online meeting, OPEC+ stuck with its road map to gradually open oil taps, agreeing to add 432,000 barrels a day in June. The plan is to make regular increases to restore the fortifications made in 2020 during the worst of the pandemic recession.

Oil prices have soared — more than 40% this year — in the U.S. And the boost in production has been less than other oil-consuming countries are pushing to reduce high prices at the pump.

COVID-19 lockdowns in China dampen demand and U.S. And major increases in oil prices have been prevented by other member countries of the International Energy Agency releasing oil from strategic reserves.

However, analysts at Ristad Energy estimate that the global market could lose up to 2 million barrels in six months if the 27 European Union countries approve a proposal to sanction Russian oil. Production is expected to fall after Moscow loses its biggest oil consumer - Europe.

Russia is the world's largest oil exporter, accounting for about 12% of global supply, and fears that its oil and natural gas could be cut off have kept fuel prices high. Before the Ukraine invasion, Russia sent 3.8 million barrels of oil a day to the European Union, where refineries turned it into gasoline and diesel fuel.

US oil prices rose on Thursday, rising 1.2% after the meeting to $109.01 a barrel, or 43% higher since the start of the year. International benchmark Brent crude raised 1.7% to $111.81 a barrel.

The price of crude oil is about 60% of the price at the pump in the United States. The average U.S. Gasoline prices were at $4.19 a gallon Wednesday, up $1.29 from a year ago.

Diesel for trucks and farm equipment raised $2.34 to $5.43 a gallon from a year ago.

Drivers in Europe, where most of the price at the pump includes taxes, are paying far more. Gasoline prices averaged 1.95 euro’s per liter or $7.77 per gallon in Germany, while diesel was 2.02 euro’s per liter or $8.05 per gallon.