OPEC+ is set to raise oil output by a tiny 100,000 barrels per day after weeks of speculation following US President Joe Biden’s trip to the Middle East.
An OPEC+ document showed the group was set to raise output by 100,000 bpd from September and two sources said it has been effectively rubber-stamped by a close-door meeting.
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“That is so little as to be meaningless. From a physical standpoint it is a marginal blip,” said Raad Alkadiri, managing director for energy, climate, and sustainability at Eurasia Group.
OPEC and its allies led by Russia have been previously increasing production by about 430,000-650,000 bpd a month although they have struggled to meet full targets as most members have already exhausted their output potential.
US and Western sanctions on Russia have caused prices of all types of energy to soar, resulting in inflation at multi-decade highs and central bank interest rate hikes.
US inflation hit 40-year highs this year and threatens Biden’s approval ratings unless gasoline prices fall.
OPEC has refused to switch to bigger output increases as group sources have cited a lack of spare capacity among members to add more barrels as well as the need for further cooperation with Russia as part of the wider OPEC+ group.
Benchmark Brent oil futures jumped by around $3 per barrel on OPEC’s decision on Wednesday, trading close to $102 per barrel.
By September, OPEC+ was meant to have wound down all of the record production cuts it implemented in 2020 after the pandemic slashed demand.
By June, however, OPEC+ was almost 3 million barrels per day below its quotas as sanctions on some members and low investment by others crippled its ability to boost output.
Only Saudi Arabia and the UAE are believed to have some spare capacity left to increase production.
French President Emmanuel Macron has said he had been told that Saudi Arabia and the UAE had very limited ability to increase oil production.
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