OPEC+ alliance boosts oil production as energy prices soar

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The OPEC oil cartel and allied producing countries including Russia will raise production by 648,000 barrels per day in July and August, offering modest relief for a global economy suffering from soaring energy prices and the resulting inflation.

The decision Thursday steps up the pace by the alliance, known as OPEC+, in restoring cuts made during the worst of the pandemic recession.

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OPEC has resisted pleas from the White House to increase oil supply to make up for production lost due to sanctions against Russia after its invasion of Ukraine.

That, along with a European Union agreement to end most oil imports from Russia, has pushed prices higher. Gasoline and diesel prices have also been rising due to a lack of refining capacity to turn crude into motor fuel.

In the US, crude prices are up 54 percent since the beginning of the year and gasoline prices are being pulled along.

The US saw a record high average gasoline pump price on Thursday of $4.71 per gallon, according to AAA. The price of crude makes up about half the price of gasoline at the pump in the US, and prices could go even higher as the summer driving season gets under way.

High gas prices for drivers are a potential factor in US politics with mid-term Congressional elections approaching later this year.

In Germany, the government has sought to soften the blow to consumer finances from energy inflation by launching deeply discounted transit passes that enable unlimited use of local trains, subways and buses for 9 euros ($10) per month.

OPEC+ decisions have been complicated by the group’s failure to meet its production targets due to underinvestment and other roadblocks in some member countries. Actual production has lagged the scheduled increases.

The White House welcomed the move Thursday by OPEC, and singled out Saudi Arabia for praise.

“We recognize the role of Saudi Arabia as the chair of OPEC+ and its largest producer in achieving this consensus amongst the group members,” White House Press Secretary Karine Jean-Pierre said on Twitter. “We also recognize efforts and positive contributions of UAE, Kuwait, and Iraq.”

She added that the announcement brought forward the monthly production increase that was previously set to take place in September.

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