OPEC Will Go Ahead and Increase Production Despite US’ ComplaintsBy Antonio Trujillo | Mon, 09/06/2021 - 09:41
OPEC+ has announced plans to move forward with its previously stipulated increase in oil production despite White House calls for greater output.
The world’s leading oil producers said they were going ahead with the deal reached just over a month ago to boost oil production levels despite US pressure to push levels even more. Following weeks of harsh negotiations, members of the Organization of Petroleum Exporting Countries (OPEC) together with other ten allies, agreed on July 18 that output will be raised to 400,000 barrels per day starting August. This effort is aimed at helping the world's economy to reactivate after the COVID-19 pandemic that caused production to plummet in 2020.
As revealed by the organization during a videoconference on Wednesday, “the decision to raise global monthly output to 400,000 daily barrels for the month of October [...] is reaffirmed,” the group stated. Though the figure represents a mere 1 percent increase in global demand, OPEC+ is concerned with the continued effects on the oil market due to the pandemic, mainly economic uncertainty and the new Delta variant. “While the effects of the pandemic continue to cast some uncertainty, market fundamentals have strengthened,” OPEC said.
Russian Deputy Prime Minister Alexander Novak revealed that the long-fought deal had had success in getting rid of accumulated supply that had been there since demand lowered last year. Production and demand coordination will now remain a priority while the market makes a full recovery. Should supply remain steady, OPEC+ also revealed that an additional 2 million barrels per day would be added by the end of the year. And although it is unclear whether member countries will all be able to keep up with intended supply, the organization will be holding monthly meetings for a continued check on demand. The next meeting is expected to take place on Oct. 4.
This comes as a defiance to non-member US administration under President Joe Biden, who had asked the organization to increase output even further to help control prices, a move criticized by both sides of the political spectrum, whose criticism highlighted both the unnecessary excess oil production and the US’ dependency on foreign oil.
“While OPEC+ recently agreed to production increases, these increases will not fully offset previous production cuts that OPEC+ imposed during the pandemic well into 2022. At a critical moment in the global recovery, this is simply not enough,” stated Jake Sullivan, national security adviser to the US government.