February 8, 2023

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Opec agrees to accelerate oil production following US pressure

2 min read

Opec and its allies on Thursday agreed to accelerate oil production in July and August, as the cartel’s linchpin Saudi Arabia bowed to US pressure to cool a crude price rally that has threatened to stall the global economy.

The cartel said it would increase output by almost 650,000 barrels a day in both months, up from planned increases of around 400,000 b/d.

The move came just days after the EU agreed to impose a ban on Russian oil imports, deepening fears of global energy shortages as Moscow’s invasion of Ukraine continues to rattle markets.

Saudi Arabia and the United Arab Emirates, Opec’s two powerhouse producers, are likely to account for most of the supply increases, with Riyadh earlier signalling that it was prepared to increase output to overcome Russian shortages.

The extra supplies are the first time the Saudi-led Opec+ cartel has deviated from a measured supply policy agreed in the depths of the pandemic oil crash two years ago, and comes after months of high-level US diplomacy to repair relations between Riyadh and Washington.

The White House welcomed the “important decision” and credited Saudi Arabia for “achieving this consensus amongst the group members”. It also recognised the “positive contributions of the UAE, Kuwait, and Iraq”.

The Opec decision comes just weeks ahead of a planned visit to the Middle East by US president Joe Biden, which may include a stop in Riyadh, despite a rocky relationship with Saudi Arabia’s day-to-day ruler, crown prince Mohammed bin Salman.

“Saudi Arabia is still working within the contours of the Opec+ framework to add some extra barrels under political pressure,” said Amrita Sen at consultancy Energy Aspects.

Oil prices fell sharply in early trading on Thursday after the Financial Times first reported a possible deal, with Brent crude, the international benchmark, dropping to a low near $112 a barrel from $116 a barrel at the close on Wednesday.

But prices rose marginally after Thursday’s…

2022-06-02 10:04:50

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