OPEC+ agrees to increase crude oil production
The increase of 188,000 barrels per day is purely theoretical as long as the Strait of Hormuz remains closed
BarcelonaRepresentatives of seven major oil producers from OPEC+ (the cartel of producing countries led by Saudi Arabia and which also includes Russia), met this Sunday remotely, have announced that the alliance's production will increase by 188,000 barrels per day (bpd) starting in June. In a statement, the Organization of the Petroleum Exporting Countries (OPEC) and its allies recall that this "voluntary adjustment" is added to the pumping increase announced last April (206,000 bpd), which "reaffirms the commitment to market stability".
The decision comes just a few days after the United Arab Emirates announced that it is leaving this organization of producing countries, which with its decisions tries to influence the price of oil. In recent days, the price of crude oil has again exceeded 100 dollars per barrel due to the situation in the Middle East, where talks between the United States and Iran to reach a peace agreement are not progressing.
The seven countries met this Sunday were Saudi Arabia, Iraq, Kuwait and Algeria (all from OPEC) as well as Russia, Oman and Kazakhstan (who are allies). "The countries will continue to closely monitor and evaluate market conditions and, in their continued efforts to support stability," the note from the seven participants states.
The announced increase is only theoretical, as Persian Gulf producers continue to be unable to export part of their crude oil due to the blockade of the Strait of Hormuz due to the unresolved war between Iran and the United States and Israel. The next meeting of the cartel, set among the seven major producers, has been announced for next June 7, coinciding with a meeting of the so-called Joint Ministerial Monitoring Committee of OPEC+.
In the two previous meetings this year, increases of 206,000 barrels per day were agreed upon, so the current increase seems to be the equivalent if the participation of the Emirates is subtracted.
Production cut
Due to the war in Iran and the problems in the Strait of Hormuz, through which 20% of exported crude oil passes, the accumulated production of OPEC countries fell by 27.5% in March. Furthermore, only a few OPEC members – especially Saudi Arabia – have the real capacity to increase production. The Emirates, which were in dispute with the Saudis for years over production quotas, expect to be able to increase pumping from the usual 3.4 million to about 5 million barrels per day once the situation in the Gulf has stabilized. Unlike other Gulf countries, the economy of the United Arab Emirates depends less and less on oil revenues, and therefore, they do not have as much pressure to maintain a high price for crude oil.
Many analysts fear that in the coming weeks there will be cuts in supplies of oil and refined products, such as kerosene, which could once again boost inflation in many industrialized countries, as a consequence of the war in the Middle East.