OPEC has no control over the 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, OPEC Secretary-general Mohammad Barkindo said on March 7.

Benchmark Brent crude prices surged on March 7, touching a 14-year high of over $139/bbl as the U.S. and European allies considered banning Russian oil imports following Russia’s invasion of Ukraine.

Russia is one of the world’s largest oil exporters, shipping around 7 million bpd of crude and fuel to global markets.

“There is no capacity in the world that could replace 7 millions barrels per day,” Barkindo told reporters at the CERAWeek industry conference by S&P Global in Houston in Houston.

“We have no control over current events, geopolitics and this is dictating the pace of the market,” he said.

U.S., European and other governments exempted energy trade from sanctions to prevent already tight markets rallying further, but that has failed.

Traders have avoided Russian oil to avoid running afoul of future sanctions or unwittingly violating sanctions already imposed on Russian banks, companies and individuals.

That disruption would become far worse with an outright ban. Some analysts posit prices could rocket even higher, with JPMorgan predicting that Brent could hit $185 by year-end.

“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.”

OPEC remained committed to market stability, Barkindo said, and continued to unwind the deep cuts that the group and its allies, which include Russia and is known as OPEC+, imposed at the height of the pandemic. Production should be fully restored from the pandemic cuts in September, he said.

On March 2, OPEC+ oil producers agreed to stick to their plans for a modest output rise in April, ignoring the Ukraine crisis during their talks and snubbing calls from consumers for more crude even as crude prices rocketed higher.

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OPEC+ Ignores Ukraine Crisis, Sticks to Oil Output Plans

The group comprising OPEC, Russia and allied producers has been hiking output by 400,000 bbl/d each month since August as OPEC+ unwinds cuts made when the pandemic slashed demand. The group has resisted repeated calls from the U.S. and other major consumers for more supplies.

In a statement after the March 2 meeting that announced the decision to roll over existing plans, the group made no mention of the Ukraine crisis, simply referring to “geopolitical developments” that were unsettling the market.

“Current oil market fundamentals and the consensus on its outlook pointed to a well-balanced market, and that current volatility is not caused by changes in market fundamentals but by current geopolitical developments,” the OPEC+ statement said.

After the March 2 talks, which lasted less than a quarter of an hour and the shortest meeting on record, one source said: “There was not even a word pronounced on the Ukraine issue.”

When asked why OPEC+ did not just end all restrictions on output at its meeting last week, Barkindo told Reuters at CERAWeek 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.

The situation in the markets was likely to be a game-changer in the energy transition, Barkindo told reporters.

Access to capital for the oil industry has become more challenging, he said, but the crisis was showing that the world could not afford to stop investing in oil and gas.

Hart Energy staff contributed to this story.

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