ANP
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NOS News•today, 15:55•Amended today, 17:48
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The so-called OPEC+ has decided at its monthly meeting to increase oil production by 100,000 barrels per day from September, with the intention of depressing the oil price. A larger production increase was not possible. After this meager decision, the oil price has been up and down all afternoon.
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OPEC is also struggling to meet higher production targets. In recent months, quite a few Member States have failed to meet their promised production. Some countries, including Angola, Nigeria and Libya, hardly invest in their production facilities and suffer from obsolescence and malfunctions. Iran faces Western sanctions because of its nuclear program and can only use part of its oil production capacity.
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The US, not a member of OPEC or OPEC+, has recently put a lot of pressure on the organization to increase oil production in the hope that the oil price would fall. Expensive energy is an important factor in high inflation. And expensive oil hits American consumers hard, and that’s what their president Biden then gets back on his plate.
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At the same time, the increased likelihood of a recession in the coming months is a warning in many countries: measures are being taken to reduce energy consumption, so oil demand is expected to decline, and the price may fall.
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High energy demand
Because most countries are recovering economically from the corona crisis and have a high energy demand, the price of oil and gas has risen sharply in recent months, with the oil price being pushed up by the Western boycott of Russian oil. Just before the invasion of Ukraine, the Brent oil price fluctuated around USD 90 per barrel, but during the war it sometimes rose to USD 120 to 130 per barrel. This was clearly noticeable at the pump, because a liter of petrol rose to a record high of 2.50 euros.
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Together with the US and Saudi Arabia, Russia is one of the largest oil producers in the world, with around 10 million barrels of oil per day. That accounts for ten percent of the world’s daily oil needs.
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In recent months, OPEC has gradually increased oil production by a total of 430,000 to 650,000 barrels per day. As a result, the oil production restriction from the corona crisis was virtually undone. The pandemic caused the economy to grind to a halt and demand for oil fell.
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