OPEC+ decided against increasing oil production despite pleas from oil-hungry nations and US pressure. Instead, it decided to continue with its original August plan and not to go beyond that.
As a result, it will only gradually increase oil production by 400,000 barrels per day each month.
OPEC+ Will Not Increase Oil Production Beyond Original Plans
In a news conference last Thursday, Russian Energy Minister Alexander Novak reiterated the group’s decision to not go beyond its original plan for gradual increases in oil output.
“The decision was made previously to increase production by 400,000 (barrels per day) every month,” he said. “And I underscore every month, until the end of 2022.
Today the decision was reiterated to maintain current parameters which were decided on earlier.”
Reporters asked Novak why OPEC+ won’t increase oil production despite requests from the US, India, and Japan. These three countries are some of the world’s largest consumers of petroleum products.
Novak said that OPEC+ is actively maintaining market balance. As a result, they remain wary of potential changes in demand.
OPEC+ Is Actually Increasing Oil Production, But Only Gradually
“From August until now, we have added 2 million barrels of additional production to the market,” Novak said. “So as planned, we are giving the market more and more volume, as it is recovering.
At the same time we also see there is a seasonal drop in demand in the fourth and first quarters of the year,” he added. Novak also noted that they observed a drop in demand from the EU in October.
As a result, Novak and the rest of OPEC+ concluded that demand remains very fluid. This “basically underscores the fact that global oil demand is still under pressure from the delta Covid variant,” he said.
He said that demand will continue to fluctuate “due to the preservation of various limitations and Covid measures in some countries.”
Oil Prices Hit Record Highs Since 2014 Due To High Demand
Contrary to OPEC’s assertion, the global market continues to demand oil as many economies are now fully reopening. Oil prices recently posted their highest prices since 2014.
Crude importers such as India and Japan are feeling the pinch. In the US, President Joe Biden blamed OPEC+ for limiting oil production and pushing prices higher.
Biden huffed that “Russia and Saudi Arabia and other major producers” get to withhold increasing oil production “is not right.”
Meanwhile, the United Arab Emirates Energy Minister Suhail Al Mazrouei stressed they are working with their customers. “I would like to reiterate the importance of the consuming nations to us as producers.
They are our partners, we work with them to move to a smooth recovery after the pandemic,” Al Mazrouei said. As a result, it’s crucial for OPEC+ to take the right measures.
He said that the group expects a surplus in supply by the first quarter of next year.
OPEC+ Makes Oil Prices Reasonable Compared to Coal and Natural Gas
In addition, several OPEC+ ministers pointed to the outrageous rise in the prices of natural gas and coal. “You look at the gas market, you look at the coal, the lack of having a governor of the market makes it so difficult for the consuming nations when it comes to a huge increase in the commodity prices,” Al Mazrouei said. “We haven’t seen that happening to oil in the same magnitude because of this group.”
Watch the Arirang News video reporting that OPEC+ dismisses U.S. calls to raise oil output:
Do you agree or disagree with OPEC+ decision to continue their gradual increase in oil production? Will this be better for the global economy burdened with high oil prices?
Let us know what you think. Share your thoughts in the comments section below.