By Nathalie Voit
The world’s oil cartel and its allies agreed to slightly boost crude oil output next month following a much-awaited meeting on Aug. 3.
According to details of the 31st OPEC and non-OPEC Ministerial Meeting, which was held via videoconference, the 13-member organization and its 10 oil-exporting partners (also known as OPEC+), led by Russia, agreed to flood the market with 100,000 more barrels per day (bpd) in September.
The increase in production is equivalent to 0.1% of global oil demand, according to The Guardian.
Many analysts believe the tiny increase is a blow to Western leaders, who had been calling for oil production to accelerate sharply for months.
President Joe Biden, for instance, traveled to Saudi Arabia on July 15 to convince Saudi Crown Prince Mohammed bin Salman to boost output. Saudi Arabia is the cartel’s largest oil producer.
The Crown Price, however, made it clear that any decision to boost supplies would not take place without input from OPEC+, according to BBC.
Referring to the +100,000 bpd consensus, the managing director for energy, climate, and sustainability at Eurasia Group, Raad Alkadiri, said: “That is so little as to be meaningless. From a physical standpoint, it is a marginal blip. As a political gesture, it is almost insulting.”
Indeed, the increase is one of the smallest in the group’s history.
However, OPEC cited “the severely limited availability of excess capacity” as its reasons for the minimal hike.
“Chronic underinvestment in the oil sector has reduced excess capacities along the value chain,” OPEC said, noting that members must advance “with great caution” in response to “severe supply disruptions.”
The oil-rich states also warned that “insufficient investment into the upstream sector” may negatively impact the world’s ability to meet rising demand beyond 2023.
Global oil benchmark Brent crude fell to $93.50 a barrel on Aug. 4, the lowest since Russia invaded Ukraine on Feb. 24. As of Thursday at 1:30 p.m. ET, the contract is trading at $93.90 a barrel, down about 3%.