ALEXANDRIA, Va.—OPEC+ agreed to maintain its planned oil output increase for the month of August, reports CNBC, despite calls to further raise the output in efforts to lower the price of crude oil. The group will increase monthly overall production for the month of August by 648,000 barrels per day.
OPEC+ is alliance of 10 oil-producing countries that join OPEC’s official 13 member countries in seeking to regulate oil production.
Last month, OPEC+ decided to raise the amount of crude oil production by 648,000 barrels per day in both July and August, which was more than expected. Over the past few months, OPEC has been maintaining a modest pace of oil output, rising between 400,000 and 432,000 barrels per day each month.
OPEC+ is slowly returning the nearly 10 million barrels per day it agreed to pull from the market in April 2020. International benchmark Brent crude futures is trading at $112 a barrel and West Texas Intermediate is at $109 a barrel.
There is question whether OPEC+ members have much spare capacity.
“We are seeing an ever tighter oil and gas market appearing—and we are feeling that right now. I think it is probably fair to say there is a little bit of a fear factor in the oil price at the moment but by and large, it is also true that there is limited spare capacity,” Shell CEO Ben van Beurden told CNBC at a media roundtable ahead of the OPEC+ meeting.
The Russian-Ukrainian war has wreaked havoc on oil prices, and crude oil has not been below $100 a barrel since Russia invaded Ukraine on February 24.
CNBC reports, however, that while there will be more oil in production, OPEC+ has been struggling to meet production quotas, and the additional oil won’t be enough to cover the potential loss of more than one million barrels per day from Russia, as nations around the world ramp up sanctions following the invasion of Ukraine.
Last month, the European Union (EU) announced it would ban 90% of Russian oil imports by the end of the year. The announcement was made after the EU met in Brussels to discuss a sixth package of sanctions against Russia.
Here’s how to explain to customers why gas prices aren’t dropping quicker when the price of crude oil does drop.