The OPEC+ coalition of oil producing countries today agreed to up its production targets by miniscule volumes of just 100,000 barrels of oil per day, in a hike that scuppered hopes for a more substantial increases that could have reversed the recent surge in prices that has wreaked havoc on the global economy.
The measly 0.2 per cent production hike will see the OPEC+ countries that produce almost half of the world’s oil supply aim to increase their output to 44m bpd from September onwards.
OPEC+’s decision to up its targets by just 100,000 bpd, volumes equivalent to 86 seconds of global oil consumption, comes as Western leaders had sought to woo OPEC+’s top producers into making more substantial increases with a view to helping oil prices ease.
The lobbying efforts saw US president Joe Biden last month travel to Saudi Arabia’s capital Riyadh in a bid to persuade the world’s third biggest oil producer – after the US and Russia – to increase production, in a bid to halt the surge in prices caused by Western sanctions on Russia and the widespread economic disruption caused by Covid-19.
However, news of OPEC+’s slight increase instead caused Brent crude prices to rise as hopes for more expansive production hikes were scuppered. Analysts forecast Brent crude prices will continue to linger around the symbolic $100 per barrel benchmark over the remainder of the year.
Biden’s trip came after UK prime minister Boris Johnson failed to secure commitments from both Saudi Arabia and the United Arab Emirates to increase production in March. Last week, Saudi Arabia’s crown prince Mohammed bin Salman also visited French president Emmanuel Macron in Paris.
The hikes come as OPEC+ has repeatedly failed to meet its production targets this summer due to longstanding problems in Nigeria and Angola and falling output in Russia due to the impacts of sanctions on the country’s oil sector.
The ongoing problems in June saw OPEC+ fail in its efforts to produce the 40.8m bpd it had previously set out to produce as the cartel instead achieved output of just 38m bpd, falling more than 2m bpd short of its quotas.