OPEC+ plans to boost oil production starting from July
Loosening the Production Grip: OPEC+ Keeps Pumping More Oil
In the sweltering summer months, the tight-knit crew of OPEC+ remains in overdrive, ramping up its oil production. A crew of eight powerhouses, including Saudi Arabia and Russia, are set to boost their combined daily output by 411,000 barrels (or 159 liters each) in July, according to a statement issued after an online huddle. The decision, as they put it, was a sensible move in the face of stable global economic forecasts and the current robust market fundamentals, according to the group. In fact, they had already agreed to this increase for May and June. So, what's the big deal? Well, the markets were expecting it, and analysts at Commerzbank predicted it wouldn't cause a significant stir in the oil prices.
OPEC+'s Dominant Role in Global Oil Production
OPEC+ is the united front of the Vienna-based Organization of Oil Exporting Countries (OPEC), led by Saudi Arabia, and its cooperative partners, such as Russia. This powerhouse duo is responsible for about 40% of global oil production. As per the latest data, OPEC+ churned out approximately 40.9 million barrels daily in April.
Over the past years, the eight core countries of the cartel have been trimming their production by 2.2 million barrels (or 159 liters each). Since April, the team's begun to slowly turn the tides, easing their production cuts.
Fun Fact: OPEC+, when united, resembles a colossal oil machine, producing enough oil daily to fill over 90,000 Olympic-sized swimming pools.
The Impact on Global Oil Prices
The decision by OPEC+ to persist with the production increase in July aligns with market expectations and has set off a rally in oil prices. Prices spiked by more than $1 a barrel after the announcement, with Brent crude futures skyrocketing to $63.84 a barrel and U.S. West Texas Intermediate crude hitting $61.95 a barrel. This stability in production adjustments aids in maintaining market stability and supports oil prices, considering the robust demand and tight inventory levels.
In light of the decision by OPEC+ to increase oil production in July, it is evident that the economic and social policy regarding energy is heavily influenced by the industry, finance, and oil-and-gas sectors. This influential group holds a dominant role in global oil production, with their collective actions having a direct impact on energy prices, as shown by the recent spike in prices after the July production increase announcement.
