OPEC Proposes Increase In Output Ahead Of December Meeting

The Organization of Petroleum Exporting Countries, or OPEC, oil producers, led by Saudi Arabia, are debating raising output.

The measure, according to the group’s representatives, is intended to help mend a gap with the Biden administration and retain momentum amid new initiatives to restrain Russia’s oil business due to the conflict in Ukraine.

For the OPEC+ meeting on December 4, a production increase of up to 500,000 barrels per day is currently being discussed.

The action would be taken a day before an embargo on Russian oil by the European Union and the implementation of a price cap on Russian crude sales by the Group of Seven affluent nations, potentially removing Moscow’s petroleum supply from the market.

Monday’s negotiations were covered by The Wall Street Journal and other news outlets, but Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, rejected the allegations and said that a production decrease would be conceivable in their place.

On October 25, 2022, in the Saudi capital Riyadh, the energy minister of Saudi Arabia, Abdulaziz bin Salman, gestures during a panel discussion that is a part of the biennial Future Investment Initiative (FII) conference.

Any output increase would represent a partial overturn of the contentious agreement made last month by OPEC and their allies, led by Russia, known as OPEC+, to reduce production by 2 million barrels per day.

According to the White House, the production reduction weakened international efforts to restrain Russia’s war in Ukraine. It was also perceived as a political jab at President Biden because it occurred at a time of rising inflation and right before the legislative midterm elections. Although U.S. officials had stated they were looking to the OPEC+ meeting on December 4 with some hope, Saudi-U.S. relations had struck a low point due to differences over oil production this year.

After the Biden administration informed a federal court judge that Saudi Crown Prince Mohammed bin Salman should have sovereign immunity from a federal lawsuit relating to the gruesome murder of Saudi writer Jamal Khashoggi, there has been talk of an increase in output.

The fact that OPEC+ is considering raising production at this time is remarkable given the more than 10% drop in oil prices during the first week of November. Following Abdulaziz’s remarks, oil prices dropped 5%. On Monday afternoon, Brent crude traded at $86.25, down more than 1%.

Delegates argued that a hike in production would ostensibly be in response to predictions that oil demand will grow over the winter, as it typically does. The first quarter of 2019 is projected to have a rise in oil demand of 1.69 million barrels per day, to 101.3 million barrels per day, compared to the average level in 2022.

Regarding impending Russian oil shortages, Prince Abdulaziz stated last month that the monarchy would “provide oil to everyone who need it from us.” Members of OPEC have warned Western nations that they will increase production if Russian output declines.

The possibility of a confrontation between Saudi Arabia and Russia, the two major producers in OPEC+, is raised by talk of a production rise. The nations have a partnership in oil production that industry officials from both countries have called a “marriage of convenience,” and they have previously fought.

Officials from Saudi Arabia have insisted vehemently that their decision to reduce production last month wasn’t made to aid Russia’s conflict in Ukraine. They assert that the cut was actually made to avoid a decline in oil demand.

Source: Oriental News Nigeria

EntekHub.com

All Author Posts