On Wednesday, “OPEC Plus” announced an increase in oil production by 100,000 barrels per day during September, which came following calls from the United States and other countries to increase supplies in the global market.
An analysis published by the newspaper described The Wall Street Journal The decision of “OPEC Plus” was a “symbolic step”, noting that it is expected to “slightly” affect oil prices.
US President Joe Biden said in statements following his recent visit to Saudi Arabia that he “expects Riyadh to help boost global oil supplies.”
The analysis indicated that “OPEC Plus”, which includes Russia, prefers prices to remain at “high” levels, especially Moscow, which wants to compensate for its revenues due to the economic sanctions imposed on it.
This is the sixth meeting of this oil alliance since the start of the Russian invasion of Ukraine in late February, as oil prices rose above $100 for the first time in 8 years.
Although the members of OPEC Plus produce less than their quotas, the producing countries will continue to coordinate oil production at least until the end of the year, and prices have witnessed a slight decline during the past weeks, as there are still concerns regarding global growth.
The newspaper quoted an unnamed senior official in the Biden administration as saying that “energy prices have fallen in recent weeks, and the US president will continue to pressure at home and abroad to ensure that energy supplies meet demand, and that fuel prices” are maintained within acceptable levels.
The report explains that the rise in fuel prices in the United States poses a threat to “Democrats”, especially with the upcoming elections.
State Department official for energy security Amos Hochstein said last month on CBS that he was confident “that Gulf producers will increase oil production following Biden’s visit to Saudi Arabia.”
Saudi officials sought to “modify expectations” and stressed that the Kingdom “will do what is required to balance the market if there is a shortage of supply,” not to mention that Riyadh is close to its “maximum” production at levels of 11-12 million barrels per day.
The report pointed out that “the capacity of the OPEC Plus alliance is limited,” especially since the shortage in supply is mainly due to “the decline in Russian production,” not to mention production problems in “Nigeria and Angola” and other producing countries.
Edward Moya of “ONDA” trading company sarcastically said, “It is the smallest production increase in the history of OPEC Plus, and it will not allow us to bypass the current energy crisis,” according to an AFP report.
And he considered that “the Biden administration will not be pleased,” expecting “a setback in US-Saudi relations.”
Matthew Holland, a geopolitical analyst at Energy Aspects, told the agency that the group’s decision reflected a “need to reconcile competing requirements” not to pump too much in order to “keep prices stable” in the face of macroeconomic concerns but also “to tackle price inflation.” energy”.
The 23 member countries of OPEC Plus are supposed to decide on Wednesday a new strategy, as the current agreement is nearing its end, as production has returned to levels before the Corona pandemic.
In the spring of 2020, the group chose to keep millions of barrels of oil underground, to avoid flooding the market with crude that it was unable to absorb due to the collapse in demand.
Since last March, when oil prices recorded unprecedented levels since the 2008 financial crisis, the two reference barrels of crude have lost more than 29 percent of their prices.