OPEC+ approves tiny oil output rise in rebuff to Biden – Business

OPEC+ plans to increase its oil production target by 100,000 barrels per day, an amount analysts say was an insult to US President Joe Biden after traveling to Saudi Arabia to ask the producer group’s leader to pump more to the United States. and help the world. economy.

The rise, equivalent to 86 seconds in daily global demand for oil, follows weeks of speculation that Biden’s trip to the Middle East and Washington’s approval of selling missile defense systems to Riyadh and the United Arab Emirates will increase oil on the global market. will bring.

“That’s so little that it’s pointless. From a physical standpoint, it’s a marginal blip. It’s almost insulting as a political gesture,” said Raad Alkadiri, director of energy, climate and sustainability at Eurasia Group.

The 100,000 bpd increase will be one of the smallest since OPEC quotas were introduced in 1982, OPEC data shows.

The Organization of the Petroleum Exporting Countries and its allies, led by Russia, a group known as OPEC+ formed in 2017, had increased production by about 430,000-650,000 bpd per month as they reversed record supply cuts introduced. when pandemic lockdowns stopped demand for.

However, they struggled to meet full targets as most members have exhausted their production potential after years of underinvestment in new capacity.

Coupled with the disruption caused by the Russian invasion of Ukraine in February, the lack of reserve stocks has fueled energy markets and fueled inflation.

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With US inflation peaking at around 40 and Biden’s approval ratings under threat unless gasoline prices fall, the president traveled to Riyadh last month to mend ties with Saudi Arabia, which collapsed after the journalist’s murder. Jamal Khashoggi four years ago.

The de facto Saudi ruler, Crown Prince Mohammed bin Salman, who was accused by Western intelligence of being behind Khashoggi’s murder – which he denies – also traveled to France last month as part of efforts to mend ties with the West. .

On Tuesday, Washington approved $5.3 billion sales of defensive missile systems to the UAE and Saudi Arabia, but has yet to reverse its ban on the sale of offensive weapons to Riyadh.

OPEC+, which will meet next September 5, said in a statement that limited reserve capacity requires it to be used with great caution in response to severe supply disruptions.

It also said a chronic lack of investment in the oil sector will affect sufficient supply to meet growing demand after 2023.

Sources within OPEC+, speaking on condition of anonymity, also mentioned the need for cooperation with Russia as part of the wider OPEC+ group.

“(This decision) is to calm the United States. And not so much as to upset Russia,” an OPEC+ source said.

Benchmark Brent oil futures LCOc1 rose about $2 a barrel following OPEC’s decision to trade close to $101 a barrel. OR

Shortly after Russia’s invasion of Ukraine, dubbed a “special military operation” by Moscow, oil prices soared to their 14-year high.

OPEC+ was set to phase out all the record production cuts it had made in 2020 in response to the impact of the pandemic by September.

But in June, OPEC+ production was nearly 3 million barrels per day below quota as sanctions against some members and low investment by others crippled the ability to increase production.

Only Saudi Arabia and the UAE are expected to have some spare capacity.

French President Emmanuel Macron has said he was told Saudi Arabia and the UAE had very limited opportunities to increase oil production.

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