The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) on Wednesday agreed to a small increase in oil production, following requests from the United States and other major consumers for more supply. The expectation, however, is that the symbolic move will have minimal impact on oil prices.
OPEC+, led by Saudi Arabia, had been under some pressure after US President Joe Biden said he hoped Riyadh would help boost global supply following a high-level trip to the kingdom in July. But OPEC+ needs to coordinate its production plan with a coalition of producers led by Russia with which it has a long-standing alliance. Moscow prefers high prices.
At their sixth meeting since Russia invaded Ukraine in late February, pushing oil prices above $100 a barrel for the first time in eight years, participants in the broader alliance, called OPEC+, agreed to increase their collective output by 100,000 barrels a day in September, delegates said.
In June, the alliance agreed to raise output by 648,000 barrels a day in July and August. Before that, OPEC+ launched monthly increases of 432,000 barrels a day as part of a plan to boost output to pre-pandemic levels. That agreement ends in August, although many members are producing below their assigned quotas.
It shows that the cartel is listening to requests from allies such as the US and Europe to help curb rising fuel prices, but help is limited as few countries have the capacity to raise output at the moment.
Meanwhile, oil prices, which soared as the covid-19 blockades eased and economic activity recovered, have fallen in recent weeks on concerns about global growth. The fall erased most of the gains seen after the invasion of Russia.
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