Opec, allies to raise production of oil as energy prices soar

·2 min read

THE Organization of the Petroleum Exporting Countries (Opec) oil cartel and allied producing countries including Russia will raise production by 648,000 barrels per day in July and August, offering modest relief for a global economy suffering from soaring energy prices.

The cost of oil, which began to rise sharply to start of the year, spiked after Russia’s Feb. 24 invasion of Ukraine. US crude prices are now up 54 percent since the beginning of the year, and international crude prices are up almost 40 percent in that time.

Gasoline prices have risen in tandem and hit another all-time high in the US Thursday, June 2, 2022.

That’s become a potential problem for US President Joe Biden in midterm Congressional elections this fall.

Elevated prices are also a threat to the global economy as it emerges from the pandemic, with both companies and families potentially reducing activity to deflect those costs.

Opec, whose de facto leader is Saudi Arabia, had for months resisted pressure from the White House to increase oil supply more quickly. That stance, along with a European Union agreement to end most oil imports from Russia, has pushed prices higher.

Gasoline and diesel prices have also been rising due to a lack of refining capacity to turn crude into motor fuel.

The US “welcomes” the increased production, White House press secretary Karine Jean-Pierre said in a prepared statement. “The United States will continue to use all tools at our disposal to address energy prices pressures.”

Biden administration officials have recently visited Saudi Arabia for talks on energy supplies and regional security issues.

The decision Thursday steps up the pace by the alliance, known as Opec+, in restoring cuts made during the worst of the pandemic recession. The group had been adding a steady 432,000 barrels per day each month to gradually restore production cuts from 2020.

The increase did not appear to ease concerns about tight supply and oil prices actually rose after the decision was announced Thursday. (AP)

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