OPEC increases oil production after Europe’s veto of Russian crude

Relief for the West. the enlarged Organization of Petroleum Producing Countries (OPEC+) reacts to pressure from the United States and Europe to open the tap and thus reduce energy prices. The cartel, made up of the 23 oil-producing countries, has agreed in a virtual ministerial meeting to increase July and August its oil production to 648,000 barrels per day, 50% more than the increase forecast for those months (432,000 barrels per day). This decision comes three days later that the European Union announced an embargo on Russian oil arriving by ship from the end of the year.

The organization of crude oil producing countries has been july 2021 gradually increasing its production to offset the “historic” snip to supply (9.7 million barrels per day) made in april 2020 and thus stabilize prices after the drop in demand for the coronavirus. The plan was extended until September of this year, with increases of 431,000 barrels per month in April, May, June, July, August and September. So, in practice, what OPEC has done is bring forward the additional 431,000 barrels for September and distribute them among July and Augustwhich means that in each of those months 216,000 extra barrels are added.

This decision It comes amid pressure from some consumer states, such as the United States, for OPEC to further increase pumping with the aim of reduce the price of crude oil. After the continuous increases after the pandemic due to the increase in demand and the low supply in the market, the barrel of Brentthe reference for Europe, reached 130 dollars with the outbreak of the war in Ukraine, its highest level in a decade, although without exceeding the record of July 11, 2008, when it reached the $147.

The cartel of producing countries warned in the middle of last month that Sanctions against Moscow will affect its export capacity and calculated that Russia, the second largest producer in the world, will supply an average of 7.5% less crude this year than expected three months ago, according to EFE. Saudi Arabia, with the same quota as Russia within the organization (nearly 11 million barrels), had indicated that did not expect to increase its production to compensate for the drop in Russian supply due to sanctions.

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In a statement, the White House spokeswoman, karine pierrehas recognized the Saudi Arabia Paper, as president of OPEC+ and his largest producer, in achieving this consensus, as well as the contributions of United Arab Emirates, Kuwait and Iraq. “The United States will use every instrument at its disposal to deal with the price pressure of energy”, concludes Pierre.

OPEC+ is made up of the 14 members from the original organization (OPEC) –Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, Indonesia, Libya, United Arab Emirates, Algeria, Nigeria, Gabon, Angola, Equatorial Guinea and Congo (Ecuador, Indonesia and Qatar left the organization in different occasions)–, to which are added, in its expanded version, Russia and other countries such as Mexico. The cartel, which will reassess the market situation in a virtual ministerial meeting next June 30, It is in the middle of a dilemma about whether or not Russia will remain in the organization after the outbreak of the war.

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