Officials in OPEC, Russia and other oil-producing nations agreed Wednesday in their hard-won July deal to increase production by 400,000 barrels per month, a modest amount equivalent to less than 1 percent of global supply.
OPEC Plus meetings can sometimes go on for days, but the decision was made in about an hour. Analysts say that The group is concerned about the future health of the oil market as the pandemic continues to increase uncertainty in the global economy, but officials did not see an immediate need. to alter.
Analysts said at a time when the summer vacations are coming to an end and schools are resuming, the time is not the right time to make a statement in the financial markets.
“They are taking the path of least resistance in the short term,” said Richard Bronze, head of geopolitics at research firm Energy Aspects.
In a brief statement issued after the meeting, OPEC Plus said that although “some uncertainty remains in the impact of the pandemic, market fundamentals have strengthened.”
When it came down to it, oil officials didn’t have enough clarity about the direction of oil demand to make the change, which could upset group members like Russia and the United Arab Emirates, which want more production. Officials are concerned about the impact of the delta version of the coronavirus on their customers’ economies, but the global recovery has not been derailed yet.
OPEC Plus has also come under pressure from the Biden administration to pump more oil. last month, Jake Sullivan, the national security adviser, said higher gasoline prices were “harming the global recovery” and OPEC Plus “should do more.”
Besides, oil prices are at a comfortable level. They have increased for much of this year as pandemic lockdowns are eased and economies begin to expand.
Prices fell sharply after the July agreement, raising concerns that production increases were too high, but they have risen to around $71 a barrel for Brent crude, the global benchmark. Along with the shutdown due to Hurricane Ida in the Gulf of Mexico a . huge fire in Mexican Offshore Facility There is a restricted supply.
the meeting was the first After a difficult series of negotiating sessions in July that led to a deal To increase production by 400,000 barrels per day in each of the coming months. The producers also resolved a dispute with United Arab Emirates exceeding the production limit.
Memories of that filthy incident are still vivid, with OPEC Plus officials having little incentive to tinker with their agreed-upon schedule.
If supply increases continue as planned, OPEC Plus will add about two million barrels of oil per day to the market by the end of the year. But doubts remain about whether member states will have the capacity to add the full amount. The group will also continue to meet monthly, giving itself time to react to the drop in demand.