What You Need to Know Ahead of OPEC Meeting Wednesday as Oil Prices Surge

Global oil prices continued surging Tuesday amid a combination of supply and demand considerations that threaten to push Brent crude beyond $90 per barrel for the first time in six months.

On the eve of the latest meeting Wednesday of the Organization of Petroleum Exporting Countries and other countries, known as OPEC+, Brent for May delivery rose as high as $89.06. The global benchmark hadn’t risen that high since mid-October.

Oil prices have increased about 15% so far this year, reflecting several market factors. Recently, those include continuing turmoil in the Middle East, Ukrainian drone strikes on Russian refineries, and Mexico’s decision to halt some crude exports as it prepares to open a new refinery.

OPEC Likely To Stand Pat

Underlying those factors: OPEC+ production cuts enacted last year. Wednesday’s meeting likely won’t change those reductions after the organization last month extended them to June. Some analysts say the cuts will remain in place for the remainder of the year.

OPEC produces about 40% of the world’s oil and its members account for 60% of the world’s petroleum market, so its production decisions have a dramatic impact on global prices.

Increasingly short oil supplies appear to have intensified that impact in recent weeks. Last month, the International Energy Agency said global supplies could fall short of demand by 300,000 barrels per day this year.

Nevertheless, OPEC+ reportedly intends to maintain its current production cuts of 2.2 million barrels per day.

But What About U.S. Producers?

Meanwhile, the U.S.—which now produces more oil annually than any single country in history—could pick up some of the slack.

The U.S. Energy Information Administration (EIA) said Tuesday that U.S. petroleum exports reached a record high of 6.1 million barrels a day last year, up 2.5% from the prior year.

That upward trend may persist. The EIA last month raised its forecast for U.S. production to 13.19 million barrels per day, up from 13.1 million barrels the prior month. The EIA will release its latest forecasts next week in its monthly Short-Term Energy Outlook.