ISLAMABAD, Aug 04 (Alliance News): The Organization of the Petroleum Exporting Countries (OPEC) Plus is set to raise its oil production target by 100,000 barrels per day, which analysts described as an insult to US President Joe Biden’s visit to Saudi Arabia.
The leading oil producer had to call for aid to support the US and the world economy.
According to foreign media, the increase is equivalent to 86 seconds of global oil demand per day and comes after weeks of speculation that Joe Biden will visit the Middle East and Washington will visit Riyadh and the United Arab Emirates. Approval of the sale of missile defense systems to the Emirates will bring more oil to the global market. .
The 100,000-barrel-a-day increase would be the smallest increase since OPEC quotas were introduced in 1982, OPEC data showed.
The group, known as OPEC Plus, led by the Organization of the Petroleum Exporting Countries and its ally Russia, which was formed in 2017, has been increasing output by about 4.3 million to 6.5 million barrels a month as they have locked A record cut in supply was introduced due to the downturn.
However, they had to struggle to meet full targets as most members had exhausted their productivity after years of underinvestment in new capacity.
A lack of additional supply, hampered by Russia’s invasion of Ukraine in February, has weighed on energy markets and fueled inflation.
U.S. inflation is at a nearly 40-year high and unless gasoline prices come down, even Biden’s endorsement is in jeopardy as the U.S. president visited Riyadh last month to improve relations with Saudi Arabia. Four years ago, after the murder of journalist Jamal Khashoggi, there was a strain in the relationship.
Washington on Tuesday approved the sale of $5.3 billion worth of defense missile systems to the United Arab Emirates and Saudi Arabia, while not yet lifting an embargo on Riyadh’s purchase of offensive weapons.
OPEC’s next meeting is on September 5 and a statement said the limited spare capacity needed to be used with extreme caution in response to severe oil supply disruptions.
OPEC also said in the statement that continued underinvestment in the oil sector will affect adequate supply to meet rising demand after 2023.
OPEC sources, speaking on condition of anonymity, also cited the need for cooperation with Russia as part of the OPEC group.
OPEC aims to end all record production cuts implemented in 2020 due to the pandemic by September.
But as of June, OPEC output was about 3 million barrels a day below its quota as economic and trade sanctions imposed on some members and underinvestment by others hampered the ability to increase output.
Only Saudi Arabia and the United Arab Emirates have some excess oil capacity.
French President Emmanuel Macron said that he has been told that Saudi Arabia and the United Arab Emirates have little capacity to increase oil production.