The group of oil-producing nations known as OPEC Plus agreed on Thursday to a larger increase in supply than planned for July and August.
The White House hailed the higher output as a diplomatic breakthrough after months of lobbying Middle East oil giants to raise production to ease price pressures. But the amount of added crude was unlikely to cause gasoline prices to fall. In fact, the price of oil rose after the announcement.
After a videoconference, the group said it would raise production by 648,000 barrels a day in July and then again in August, an increase of about 50 percent over the monthly rise set under a program last year. Effectively, what OPEC Plus is doing is compressing three months of planned increases into two months.
But the OPEC Plus member countries are not expected to generate that output when the time comes. Many of the producers have already run out of additional production capacity. Only Saudi Arabia, the United Arab Emirates and one or two other countries have more oil to add.
Whatever they add risks being offset by what happens in Russia. Russian production is in decline in the wake of Western sanctions imposed after the invasion of Ukraine. According to the International Energy Agency, Russia is producing about 15 percent less than its target of 10.8 million barrels a day for July. Further decreases in Russian output are expected this year as the European Union’s effort to stop most Russian oil purchases takes effect.
While the amount of additional oil will not be large, some analysts say the fact that OPEC Plus was willing to depart from its previous routine could be the beginning of a breakthrough, leading to more cooperation from Saudi Arabia and other countries like the United Arab Emirates as sanctions reduce Russian output.
Until recently, these countries have insisted that they could not depart from the schedule agreed by OPEC Plus last July. The break comes after diplomatic work by Amos Hochstein, the State Department’s special…
The New York Times
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