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OPEC meets amid thin production capacity worries

OPEC meets amid thin production capacity worries

FILE PHOTO: A person operates a tap of crude oil during the destruction of Bakana ii illegal camp, in Okrika, Rivers state, Nigeria January 28, 2022. REUTERS/Afolabi Sotunde/File Photo

LONDON: OPEC and OPEC+ began a series of two-day meetings on Wednesday (Jun 29) with sources saying chances of a big policy change look unlikely this month.

At its last meeting in early June OPEC+ decided to speed up production cuts and to raise output each month by 648,000 barrels per day (bpd) in July and August, up from earlier increases of 432,000 bpd.

OPEC+ consists of OPEC and allies such as Russia.

Washington welcomed OPEC's decision, which came after months of pressure from the West on OPEC+ to raise production to help cool off oil prices, which soared as a result of sanctions on Russia for the invasion of Ukraine.

However, prices kept rising due to tight supply and worries that OPEC is coming close to running out of spare capacity to raise output any further.

French President Emmanuel Macron told US President Joe Biden this week that he has been told that Saudi Arabia and the United Arab Emirates can barely increase oil production.

Oil prices rose for a fourth day on Wednesday, with Brent coming close to US$120 per barrel on spare capacity concerns and plans by G7 countries to impose price caps on Russian oil.

Biden will travel to the Middle East, including Saudi Arabia next month, and is widely expected to press Riyadh to raise production.

At least five OPEC+ delegates said the meeting this week will focus on confirming August output policies while not discussing September.

Two other delegates said the issue of production post August could emerge but it was not clear what steps could be taken.

OPEC began a separate meeting after 1100 GMT and three delegates said the Wednesday meeting was administrative and was unlikely to result in a major decision.

Source: Reuters


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