Saudi Arabia and other OPEC members may boost oil output to offset a drop in Russian production, a move that could lead to an ice-breaking visit by US President Joe Biden to Riyadh.
Two OPEC sources said the group was working on making up for a drop in Russian oil output as Russia's production has fallen by about 1 million barrels per day bpd as a result of Western sanctions on Moscow over its invasion of Ukraine.
One OPEC source familiar with the Russian position said Moscow could agree with other producers raising production to compensate for Russia's lower output but not necessarily making up all the shortfall.
The compensation could be agreed, but the source said that a decision might not be taken at Thursday's meeting of the Organization of the Petroleum Exporting Countries, Russia and others.
A Gulf source in the OPEC said that a decision on the matter was highly likely to be made at Thursday's ministerial meeting.
U.S. diplomats have been working on organizing President Joe Biden's first visit to Riyadh after two years of strained relations because of disagreements over human rights, the war in Yemen and US weapons supplies to the kingdom.
Saudi Crown Prince Mohammed bin Salman, known as MbS, has been accused of appalling the killing of Saudi journalist Jamal Khashoggi in 2018, a charge that the prince denies. Biden has refused to deal with MbS as a Saudi de-facto ruler.
A source briefed on the matter said Washington wanted clarity on oil output plans from Saudi Arabia and the United Arab Emirates before a potential Biden visit to Bahrain for a summit with Gulf Arab leaders, including MbS, in Riyadh.
A Gulf source said an impending Biden trip could cause pressure on Gulf OPEC producers to increase production, as they were not named due to the sensitivity of the matter.
Biden has pressed Saudi Arabia to pump more oil after low approval ratings before US mid-term elections due to surging gasoline prices. Sources on both sides say MbS has refused to act until Biden is ready to deal directly with him.
OPEC ministers held online talks on Thursday when they were expected to stick to an existing plan for a regular monthly increase of 432,000 barrels per day, similar to previous meetings when they spurned calls for bigger output hikes.
According to industry estimates, Western sanctions could reduce production from Russia, the world's second largest oil exporter, by as much as 2 million to 3 million barrels per day.
Russia had produced less than its OPEC target of 10.44 million barrels per day in April, with output of 9.3 million barrels per day.
In 2020, OPEC agreed to reduce output by a record amount when the pandemic hammered demand. The deal, which will expire in September, has been wound down gradually by the group. By then the group will have limited spare capacity to lift output further.
Saudi Arabia is now producing 10.5 million barrels per day and has rarely tested production levels above 11 million barrels per day.
OPEC is estimated to have less than 2 million barrels of spare capacity along with the Gulf state, the UAE.
There isn't much spare oil in the market to replace potential lost barrels from Russia, said Bjarne Schieldrop, chief commodities analyst at SEB bank.
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