To: 08/03/2022 16:43
The oil network Opec+ only wants to slightly increase production volumes in the fall. Hopes of an easing in the price of crude oil are thus dampened. Experts speak of a symbolic gesture from the cartel.
The Organization of the Petroleum Exporting Countries and its supporters, OPEC+, plan to increase their oil production only slightly in the short term for September. The September daily production target has been increased by 100,000 barrels (159 litres), the oil cartel said after an online conference today. This corresponds to 0.1% of global demand.
At their monthly meeting in early June, the 20 or so cartel states decided to gradually reverse the corona-related production cuts from the start of 2020 to the end of August and increase production. However, the oil network is currently producing even less than expected. According to the International Energy Agency, the backlog in June was around 2.8 million barrels per day.
The increase in oil production now decided is one of the weakest in the history of OPEC. It is likely to cause disappointment in many Western countries. The OPEC decision is unlikely to have long-term effects on prices in international crude oil markets. After the announcement of the new production target, the price of Brent oil from the North Sea rose 1.5% to $102 a barrel.
Is there almost no free capacity left?
Saudi Arabia, one of the largest oil producers in the world, is currently in a difficult position. On the one hand, the State relies on cooperation with the Russian State which, against the background of the war, does not increase its production and benefits from high prices. On the other hand, the Gulf State is an ally of the United States. US President Joe Biden recently suggested expanding production there to bring down prices.
In a press release, Opec+ referred to “extremely limited excess capacity”, which the oil cartel must use with the utmost caution. According to analyst Stephen Brennock of brokerage PVM Oil Associates, most OPEC members do not have spare capacity to increase production. The increase in production which has just been decided upon is a symbolic gesture.