OPEC+ increasing oil production as energy prices continue to rise

The OPEC oil cartel and allied produc- ing countries including Russia will raise production by 648,000 barrels per day in July and August, offering modest relief for a global economy suffering from soar- ing energy prices.

The cost of oil, which began to rise sharply in January, spiked after Russia’s Feb. 24 invasion of Ukraine. U.S. crude prices are now up 54% since the beginning of the year, and international crude prices are up almost 40%.

Gasoline prices have risen in tandem and hit another all-time high in the U.S. on Thursday. That has become a potential problem for Pres- ident Joe Biden in midterm elections this fall.

Elevated prices also are a threat to the global economy as it emerges from the pandemic, with both com- panies and families potentially reducing activity to deflect those costs.

OPEC, whose de facto leader is Saudi Arabia, had for months resisted pres- sure from the White House to increase oil supply more quickly. That stance, along with a European Union agreement to end most oil imports from Russia, has pushed prices higher. Gasoline and diesel prices also have been rising due to a lack of refining capacity to turn crude into motor fuel.

The U.S. “welcomes” the increased production, White House press secretary Karine Jean-pierre said in a state- ment. “The United States will continue to use all tools at our disposal to address energy price pressures.”

Biden administration officials recently visited Saudi Arabia for talks on energy supplies and regional security issues.

The decision on Thursday steps up the pace by the alliance — known as OPEC+ — in restoring cuts made during the worst of the pandemic recession. The group had been adding a steady 432,000 barrels per day each month to gradually restore production cuts from 2020.

The increas e di d n ot appear to ease concerns about tight supply. Oil prices actually rose after the decision was announced.

OPEC+ decisions have been complicated by the group’s failure to meet its production targets due to underinvestment and other roadblocks in some member countries. Actual production has lagged behind the scheduled increases.

The U.S. reached a recordhigh average of $4.71 per gallon on Thursday, according to AAA.