By Barani Krishnan

Investing.com — Shut out the noise, stick to the script and let consumers’ problems be consumers’ problems, not ours. OPEC+’s stance worked well in pushing crude prices up for a fourth day in a row, adding some 3% to Monday’s session after an initial tumble in Asian trading as market participants reacted to poor economic data out of top oil importer China.

London-traded settlement at $114.24 per barrel. This is up 2.4% or $2.90. The price dropped to $109 in the morning.

New York-traded WTI settled at $114.20. This is an increase of $3.71 or 3.4%. WTI was as low at $106.28 in an earlier session.

The turnaround in crude prices came after Saudi Arabia’s Energy Minister Abdulaziz bin Salman said a dearth of refining capacity in the United States and elsewhere meant that gasoline and other oil products would remain expensive, even if exporters pumped more crude. 

The US has seen record fuel prices since last week. Diesel is at $6 and gasoline at $4.50 at certain pumps, while diesel hovers around $6. Other than a shortage of refining capacity and a rising demand for fuels ahead the peak season for travel, energy prices have risen to previously unimagined levels. 

Abdulaziz’s remarks form a now familiar OPEC+ refrain that there are “physical impediments that no producer can solve.” 

The original 13 countries that were led by the Riyadh, OPEC+ (Organization of the Petroleum Exporting Countries), have maintained a monthly increase of about 430,000 barrels. This includes 10 Russia-reliant countries. That falls clearly short of demand that is at least 3 million barrels higher, as a direct consequence of the West’s sanctions on Russia that have de-legitimized an equal number of barrels that used to be on the market.

A severe shortage of gasoline in America is being caused by the downsizing and closure of many refineries following the outbreak of the coronavirus. Refineries that have stayed in the business are now providing only what they can — or, more accurately, what they desire — without putting any money into expanding existing capacity or acquiring the idled plants that can be reopened to provide some measurable relief to consumers. The reason the refineries are doing this is to make record profits, which may be lost in expansion. Another factor is the slow turnaround time required for any new refinery in order to make a profit.

Bloomberg estimates that more than 1.0 million barrels per day of U.S. oil refining capacity — or about 5% overall — has shut since the Covid-19 outbreak initially decimated demand for oil in 2020. Outside of the United States, capacity has shrunk by 2.13 million additional barrels a day, energy consultancy Turner, Mason & Co says. Bottom line: The squeeze will only get worse with no plans for expansion.

“There is no refining capacity commensurate with the current demand and the expectation of the demand in the summer,” Abdulaziz said Monday in comments carried by Bloomberg from an energy conference in Bahrain.

His remarks were echoed by Bahrain’s Oil Minister Sheikh Mohammed Bin Khalifa Bin Ahmed. 

“There’s no new capacity coming,” Sheikh Mohammed said at the same event. “Even if you produce more crude, there isn’t demand for it, there aren’t any more refineries.”