Today, Wednesday, the members of the Organization of Petroleum Producing Countries in the OPEC Plus alliance approved the strategy that was developed in mid-July last, to gradually increase production to support the recovery of the global economy, which was severely affected by the outbreak of Corona.
The organization said in a statement on its website after a meeting at its headquarters in Vienna on Wednesday that OPEC Plus “confirms once again the upward adjustment of total monthly production by 400,000 barrels per day in October.”The decision did not surprise market observers, and is a renewal of the alliance’s strategy that was activated on July 18 to increase production from August by 400,000 barrels per day.
At this pace, it is assumed that 5.4 million barrels per day will be brought to the market by the fall of 2022.
“Although the Corona pandemic continues to cause uncertainty, market fundamentals have strengthened,” OPEC Plus said.
The increase in production “should also help maintain cohesion among key members of the alliance by putting an end to the political problems at major meetings in the recent past,” said Han Tan of Exinity Group.
Although the short duration of Wednesday’s meeting testifies to rapid consensus, Russian Deputy Prime Minister Alexander Novak caused confusion shortly before the meeting by saying that Russia was able to increase its production beyond the quota set by OPEC Plus.
The Interfax news agency quoted Novak as saying that Russian oil companies are restoring their production smoothly while respecting their commitments, but also saying that “they can do it faster and in larger quantities.”
By continuing with its prudent strategy, the 23 members will not be able to deviate from analyst expectations or succumb to pressure from Washington.
The White House indirectly called for a greater increase in coalition production in order to curb price hikes, which are weighing on the price of US fuel.
US National Security Adviser Jake Sullivan explained on August 11 that members of the Saudi- and Russian-led cartel were not doing “enough” to stimulate oil production, threatening economic recovery and fuel prices.
The price of Brent, the North Sea and West Texas Intermediate, interacted with the OPEC Plus decision, and decreased by about 0.50%.
OPEC Plus will meet again on October 4, according to the statement.
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