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OPEC meets amid output struggles, U.S. pressure for more oil

A 3D-printed oil pump jack sometimes appears while watching OPEC logo in this illustration picture, April 14, 2020. REUTERS/Dado Ruvic/File Photo

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  • Kazakhstan says preferred oil price is $60-$80/barrel
  • OPEC faces output problems to meet up existing targets
  • U.S. seeking higher OPEC production to counter Russia

NUR-SULTAN/LONDON, Aug 3 (Reuters) – OPEC+ may need to raise oil production in order to avoid market overheating, OPEC+ member Kazakhstan said on Wednesday, because the band of oil producers meets amid U.S. pressure to include barrels to the marketplace some members have previously exhausted their output potential.

“We’ve always said that the most well-liked price corridor is $60-80 per barrel. Today the purchase price is $100. So we would need to raise output in order to avoid overheating,” Kazakh energy minister Bolat Akchulakov told reporters.

The marketplace has been largely expecting OPEC+ to help keep output steady or decide on a slight increase. Three OPEC+ sources said on Wednesday they still saw little opportunity for an output policy change when commenting on the Kazakh minister’s statement.

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AMERICA has put OPEC leaders Saudi Arabia and United Arab Emirates under great pressure to pump more oil to greatly help rein in prices boosted by rebounding demand and Moscow’s invasion of Ukraine.

U.S. and Western sanctions on Russia have caused prices of most forms of energy to soar, leading to inflation at multi-decade highs and central bank interest hikes.

OPEC has been increasing output consistent with its targets by about 430,000-650,000 barrels each day a month lately and contains refused to change to bigger output increases.

Group sources have cited too little spare capacity among members to include more barrels and also the dependence on further cooperation with Russia within the wider OPEC+ group.

“It appears unlikely OPEC+ can do anything when it meets later today,” said Callum Macpherson from Investec, citing rising concerns in regards to a slowing global economy and too little spare capacity.

“OPEC+ is struggling to meet up the levels its production limits have been raised to,” he said, adding a surprise decision to improve production would put oil under further pressure to fall below $100 per barrel.

Benchmark Brent oil futures fell by a lot more than $1 on Wednesday to trade just above $99 per barrel.

The meeting on Wednesday will discuss production policies from September and perhaps onwards beginning with 1130 GMT.

By September, OPEC+ was designed to have wound down all the record production cuts it implemented in 2020 following the pandemic slashed demand.

By June, however, OPEC+ was almost 3 million barrels each day below its quotas as sanctions on some members and low investment by others crippled its capability to boost output. read more

Only Saudi Arabia and the UAE are thought to involve some spare capacity left to improve production.

French President Emmanuel Macron has said he previously been told that Saudi Arabia and the UAE had not a lot of capability to increase oil production. read more

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Additional reporting by Alex Lawler, Tamara Vaal and Mariya Gordeyeva; editing Jason Neely

Our Standards: The Thomson Reuters Trust Principles.

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