The decision marks a significant slowdown in raising the OPEC+ production target level compared to July and August. For these months, the group had previously agreed to an increase of 648,000 barrels per day.
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Thus, by September, OPEC+ will completely dismantle the record reduction in production, which it entered into in 2020 after the drop in demand caused by the covid-19 pandemic.
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Oil prices responded to Wednesday’s decision by rising. At one point, North Sea Brent gained nearly two percent and exceeded $102 a barrel. However, the price later returned below $101.
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This year, the war in Ukraine mainly contributes to the increase in the prices of oil, gas and other commodities. More expensive energy is also the main cause of the significant increase in inflation around the world.
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According to analysts, the OPEC+ decision is a blow to the United States’ hopes for a more significant increase in oil production. “It’s so small it doesn’t matter. From a physical point of view, this is a marginal movement. As a political gesture, it’s almost insulting,” Eurasia Group analyst Raad Alkadiri said of the agreed scale of production increases.
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In addition, the production of the OPEC+ group has been significantly behind the agreed levels for a long time. In June, production was almost three million barrels per day lower than the set quotas predicted.
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US President Joe Biden completed a four-day trip to the Middle East last month, one of the goals of which was to push oil-producing countries to increase oil production. However, OPEC+’s room for more significant production increases is limited, as some member countries face sanctions and others struggle with insufficient investment in production.
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