OPEC+ agrees to increase crude oil production

BarcelonaRepresentatives from seven major oil producers in OPEC+ (the cartel of oil-producing countries led by Saudi Arabia and including Russia), meeting virtually this Sunday, 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 increase in pumping announced last April (206,000 bpd), which "reaffirms the commitment to market stability".

The decision comes just days after the United Arab Emirates announced it is leaving this organization of producing countries, which tries to influence the price of oil with its decisions. In recent days, the price of crude oil has once again exceeded 100 dollars per barrel due to the situation in the Middle East, where talks between the United States and Iran to close a peace agreement are not progressing.

The seven countries meeting this Sunday have been 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 by 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 decrease

Due to the war in Iran and 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, who 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 does not have as much pressure to maintain a high price of 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.