Oil Market Awaits Next Step as OPEC+ Meets Wednesday

By Adedapo Adesanya

The oil market will be waiting for the next decision concerning plans to boost production as the Organisation of the Petroleum Exporting Countries and allies (OPEC+) meets on Wednesday, August 3 following the expiry of the two-year deal.

This will come weeks after US President Joe Biden, to no avail, tried to persuade Saudi Arabia to boost production during a controversial visit to the kingdom.

The White House has been pressing the oil cartel to step up production to tame prices that have surged since Russia invaded Ukraine in late February but the group, which is led by Saudi Arabia and Russia, has stuck to modest increases so far.

The 13-member Organisation of the Petroleum Exporting Countries (OPEC), along with 10 allies that include Russia, had slashed production at the height of the COVID-19 pandemic in 2020 after a plunge in demand caused prices to sink to their lowest.

The group began to raise production last year, agreeing to add 400,000 barrels per day to the market. It backed an increase of nearly 650,000 barrels per day in June, still not enough to spark a big drop in oil prices.

The alliance’s output is back to pre-virus levels, but just on paper as a few members have struggled to meet their quotas.

All eyes will be on whether OPEC+ sticks to the same output policy or steps it up.

After his meetings with Saudi leaders in mid-July, Mr Biden said he was “doing all I can” to increase the oil supply but added that concrete results would not be seen “for another couple weeks” — and it was unclear what those might be.

Wednesday’s meeting will reveal whether his efforts were successful.

However, analysts warn against expecting any drastic increases with expectations that OPEC+ has to take into account the fact that the interests of Russia — a key player in the alliance — are diametrically opposed to those of the US.

The group will decide on output policy under a new secretary general, Kuwait’s Haitham Al-Ghais, who took office on Monday following the death of Nigeria’s Mohammed Barkindo last month after six years at the helm of affairs.

“I look forward to working with all our Member Countries and our many partners around the world to ensure a sustainable and inclusive energy future which leaves no one behind,” Mr Al-Ghais said in a statement.