Secretary General Mohammad Barkindo on Monday said, OPEC has not control over events that have led to the run up in global oil prices and there is not enough capacity worldwide to compensate for the loss of Russian supply.
Crude oil futures of Brent surged on Monday to $130.87 par barrel by 2.26% whereas U.S. WTI is trading at $126.01 par barrel up by 2.34%.
Russia is the world’s top exporter of crude and fuel, shipping around 7 million bpd or 7% of global supplies.
“There is no capacity in the world that could replace 7 millions barrels per day,” Barkindo told reporters at an industry conference in Houston.
“We have no control over current events, geopolitics, and this is dictating the pace of the market,” he said.
Traders have avoided Russian oil to avoid running afoul of future sanctions or unwittingly violating sanctions already imposed on Russian banks, companies and individuals.
Big banks including JP Mogran and Chase predicted Brent to reach as high as $185 par barrel by the end of this year.
“I have heard from several speakers here at CERAweek that current tightness in the market condition might be creating some demand destruction,” said Barkindo.
“Even as that might be the case, the other side of the equation is probably more critical at the moment, which is supply is increasingly lagging behind.”
When asked why the Organization of the Petroleum Exporting Countries (OPEC) and its allies did not just end all restrictions on output at their meeting last week, Barkindo told Reuters the situation in oil markets had developed since the group met on March 2.
“Let’s see what happens at the next meeting,” he said.