Friday, October 7 2022 Sign In   |    Register
 

News Quick Search


 

News


Front Page
Power News
Gas News
Today's News
Yesterday's News
Week of Oct 03
Week of Sep 26
Week of Sep 19
Week of Sep 12
Week of Sep 05
By Topic
By News Partner
News Customization
Feedback

 

Pro Plus(+)


Add on products to your professional subscription.
  • Energy Archive News
  •  



    Home > News > Gas News > News Article

    Share by Email E-mail Printer Friendly Print

    OPEC+ boosts oil output by slower pace than previous months


    August 3, 2022 - CATHY BUSSEWITZ, AP Energy Writer

     

      The OPEC oil cartel and its allies decided Wednesday to boost production in September by a much slower pace than in previous months at a time of high gasoline prices and unstable energy supplies exacerbated by Russia's war in Ukraine.

      OPEC, led by Saudi Arabia, and its allies, led by Russia, said they will increase output to 100,000 barrels a day next month after raising it by 648,000 barrels per day in July and August. The group considered what effects staggering inflation and rising COVID-19 rates may have on global demand for fuel in the fall.

      It comes after U.S. President Joe Biden visited Saudi Arabia last month, aiming to improve relations and encourage more oil production from the cartel to draw down high prices at the pump. While gasoline prices have been falling, they are still high and posing a political problem for him as inflation surges.

      No oil production agreement was announced, but Biden said he expected OPEC to take steps to increase production in the coming weeks. Those hopes didn't materialize.

      As a result, “the U.S. may go looking for other sources of oil, whether it’s Venezuela or Iran,” said Jacques Rousseau, managing director at Clearview Energy Partners.

      Biden's administration also is encouraging the U.S. oil and gas industry to increase production.

      “You’ve just seen the second-quarter results from some of these companies. They are record profits,” Amos Hochstein, a senior adviser for energy security at the State Department, said Wednesday on CNBC. "They should be investing those dollars right back into production increases.”

      Despite the modest increase announced by OPEC+, the administration was trying to highlight that prices are already falling and could fall further with more domestic production.

      “We’re pretty pleased with what we’re seeing” on prices for oil and gas down from highs, but “we know that this is not enough,” Hochstein said.

      A senior Biden administration official, who insisted on anonymity to discuss private conversations, called the OPEC+ announcement a step forward. The official said the group has restored all the production cuts it made in 2020 during the depths of the pandemic, when oil prices and demand plummeted.

      The group has been gradually adding more oil and gas to the market as economies recovered.

      Some OPEC nations, such as Angola and Nigeria, have been producing less than the agreed-upon amount. Saudi Arabia and United Arab Emirates, on the other hand, have the capacity to increase production.

      OPEC's decision appears to be an attempt to appease those countries that can't produce more, Rousseau said.

      “Any time you increase the target, there’s countries that can’t participate,” he added. “If you only raise production by 100,000 barrels per day, that’s just a small piece for everybody.”

      As a result, the amount of oil on the market might not keep up with demand, so high oil prices may persist for some time.

      While the U.S. was probably hoping for a larger production increase, “in terms of overall supply/demand management, OPEC’s decision is logical,” Noah Barrett, research analyst for energy and utilities at Janus Henderson Investors, said in a note. “There’s still a great deal of uncertainty on oil demand in the back half of this year, driven by questions around Chinese demand, and the potential for U.S. or even a global recession.”

      The price of oil rose sharply after Russia invaded Ukraine in February. It fell somewhat since OPEC+ last met but rose modestly Wednesday. A barrel of U.S. benchmark crude was selling for just over $94, compared with more than $105 per barrel a month ago. Brent crude, the international standard, was selling for just over $100 a barrel, also down about $110 from a month ago.

      Russia's oil and natural gas exports to the world have declined as many nations imposed sanctions or curtailed buying from the major supplier due to its invasion of Ukraine. Russia also has reduced or cut off natural gas to a dozen European countries, further driving up energy prices, squeezing people's spending power and threatening to cause a recession if nations can't stockpile enough natural gas to get through the winter.

      It was the first official monthly meeting of the OPEC+ group since its leader, Mohammad Sanusi Barkindo, died at age 63 in his home country of Nigeria last month. Haitham al-Ghais, a veteran of the Kuwait Petroleum Corporation, took over as secretary general of OPEC this week.

      In the U.S., a gallon of regular gasoline was selling for $4.16 on average Wednesday. That’s substantially lower than in June, when the nationwide average surpassed $5 a gallon, but it’s still painfully high for many front-line workers and families to afford and about 31% higher than what drivers were paying a year ago.

      Associated Press writers Josh Boak and Zeke Miller in Washington contributed to this report.

    TOP

    Other Articles - International


    TOP

       Home  -  Feedback  -  Contact Us  -  Safe Sender  -  About Energy Central   
    Copyright © 1996-2022 by CyberTech, Inc. All rights reserved.
    Energy Central® and Energy Central Professional® are registered trademarks of CyberTech, Incorporated. Data and information is provided for informational purposes only, and is not intended for trading purposes. CyberTech does not warrant that the information or services of Energy Central will meet any specific requirements; nor will it be error free or uninterrupted; nor shall CyberTech be liable for any indirect, incidental or consequential damages (including lost data, information or profits) sustained or incurred in connection with the use of, operation of, or inability to use Energy Central. Other terms of use may apply. Membership information is confidential and subject to our privacy agreement.