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Global Economy

Opec increases oil production only minimally

The Organization of the Petroleum Exporting Countries and its supporters, Opec+, plans to only slightly increase their short-term oil production for September. September's daily production target was increased by 100,000 barrels (159 liters), the oil cartel said after an online conference today. This corresponds to 0.1 percent of global demand.

At their monthly meeting at the beginning of June, the around 20 states in the cartel decided to gradually reverse the corona-related production cuts from the beginning of 2020 to the end of August and to increase production. However, the oil network is still producing less than agreed. According to the International Energy Agency, the backlog in June was around 2.8 million barrels a day.

The increase in oil production that has now been decided is one of the smallest in OPEC history. It is likely to cause disappointment in many western countries. The OPEC decision is unlikely to have any long-term effects on prices on the international crude oil markets. After the new production target was announced, the price of Brent North Sea oil rose by 1.5 percent to $102 a barrel.

Hardly any free capacity left?

Saudi Arabia, one of the world's largest oil producers, is currently in a delicate position. On the one hand, the state relies on cooperation with the Russian state, which, against the background of the war, is not increasing its production and is benefiting from the high prices. On the other hand, the Gulf state is an ally of the United States. US President Joe Biden recently suggested expanding production there in order to depress prices.

In a statement, Opec+ referred to “extremely limited excess capacity”, which the oil cartel must use extremely carefully. According to analyst Stephen Brennock from brokerage house PVM Oil Associates, most OPEC members do not have any spare capacity to increase production. The increase in production that has now been decided is a symbolic gesture.

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