OPEC to ramp up oil production as gas prices soar
The consortium of the world's largest oil-producing countries agreed to boost fossil fuel production faster than expected Thursday as energy prices rise worldwide due to Russia's drawn-out war in Ukraine.
OPEC announced plans to add 648,000 barrels per day in July and August, reversing historic drawdowns in supply linked to the pandemic.
In April 2020, OPEC pulled 10 million barrels of fuel per day from the market and has slowly added capacity back as energy demand increases worldwide.
Oil prices slackened on the news, signalling a potential reprieve for consumers. West Texas Intermediate crude futures, the U.S. oil benchmark, traded at US$115 a barrel shortly after the announcement. It sold for US$119 a barrel as recently as Tuesday. Brent crude, the international benchmark, traded at US$116 a barrel after opening the day a dollar higher.
OPEC ministers “highlighted the importance of stable and balanced markets for both crude oil and refined products,” according to a brief readout of the results of Thursday's meeting.
Energy markets have been anything but stable. Even before Russia's invasion of Ukraine, inflation was pushing oil prices up worldwide, and since the Kremlin launched its attack on Feb. 24,
Brent crude is up 17 per cent.
International leaders have lobbied OPEC nations and their 10 unaffiliated oil-exporting allies, called OPEC+, to ramp up production to steady the market, but the group — led most vocally by Saudi Arabia — had said it hadn't yet seen true shortages.
That stance appears to have changed, as the Thursday's meeting identified “recent reopening from lockdowns in major global economic centres” as a reason to increase output.
Eight of the world's 10 largest economies have sworn off Russian oil due to war-related sanctions.