OPEC+ raises output additionally as Russia's war roils global energy markets
June 6, 2022: -On Thursday, OPEC and its oil-producing allies agreed to hike output in July and August as Russia’s attack on Ukraine wreaks havoc on global energy markets.
OPEC+ will increase display by 648,000 barrels for each day in both July and August, which brings forward the end of the historic output cuts OPEC+ implemented in the throes of the Covid pandemic.
The group has been slowly returning the almost 10 million barrels for each day it decided to remove from the market in April 2020. Production rising between 400,000 and 432,000 casks every month in recent months.
Oil prices reversed early losses in mid-morning trading and continued to increase during the session. West Texas Intermediate crude futures, the U.S. oil benchmark, ends the daylight at $116.87 for each barrel for a gain of 1.4%. International standard Brent crude counted 1.14% to settle at $117.61.
The decision comes as it grapples with flooding liveliness prices. Governments, including the Biden government, have been calling on producers to raise output to dampen oil’s wild ride.
White House press secretary Karine Jean-Pierre expressed the administration welcomed OPEC+’s announcement.
“We recognize the role as the chair of OPEC+ and its huge producer in achieving this consensus amongst the group members,” she said in a statement, counting that the “United States will continue to use all tools at [its] removal to address energy prices pressures.”
While, in theory, the output will be higher looking forward, OPEC+ has been struggling to meet production quotas. The additional barrels slated to reach the market will not make up for the potential loss of more than 1 million barrels each day from Russia as nations around the world ramp up sanctions after the invasion of Ukraine.
EU leaders agreed to ban 90% of Russian crude by the year-end as part of the bloc’s sixth sanctions package on Russia since the recent February invasion.
The rapid increase is a significant contributor to decades-high inflation across economies. In March, crude reached the highest since 2008 and has stayed firmly above $100. On Thursday, the national average for a regular gallon of gasoline in the U.S. reached another record high of $4.71.
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