OPEC Approval of Tiny Oil Output Surge Is an Insult to Biden, Analysts Say | OPEC

The OPEC cartel and its allies have agreed to increase crude production by just 100,000 barrels a day, in what analysts have called an insult directed at US President Joe Biden.

Ministers from the 13-member group and its allies, led by Russia and known as OPEC+, met Thursday in a closed-door video conference and approved a production increase equivalent to 86 seconds, or 0.1%, of global demand. of oil.

The minuscule boost in September is understood to be seen as a snub to Biden, who visited influential OPEC member Saudi Arabia last month to encourage the Gulf state to increase output to help the ailing world economy.

In response to the increase, Raad Alkadiri, managing director for energy, climate and sustainability at Eurasia Group, said: “That’s so little it doesn’t make sense. From a physical point of view, it is a marginal problem. As a political gesture it is almost insulting.”

Brent crude prices rose to $102 (£83.92) a barrel, a jump of $3, following OPEC’s decision, but then fell back.

Explaining the reasons for the small increase, OPEC members said “severely limited availability of excess capacity” meant they had to proceed with “great caution” in response to “serious supply disruptions”.

He added that “chronic underinvestment in the oil sector has reduced excess capacity” in all major sectors.

The group also issued a note warning that “insufficient investment” in the upstream sector (finding new oil reserves) could negatively affect oil supply “in a timely manner” to meet increased demand beyond 2023.

OPEC and its allies previously increased oil production by around 430,000-650,000 barrels per month, but some cartel members have exhausted their production potential.

The group has agreed to remove all production cuts implemented during a period of lower demand during the Covid-19 pandemic in 2020.

In June, however, OPEC and its allies were nearly 3 million barrels a day short of their quotas, as sanctions imposed on some members and underinvestment by others inhibited their ability to boost production.

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Only Saudi Arabia and the United Arab Emirates are believed to have spare capacity to increase production.

It comes after Biden and French President Emmanuel Macron met separately with Crown Prince Mohammed bin Salman in recent weeks.

A US administration official said on Wednesday that it was “a step forward” and added that Biden wanted to see more increases.

The reestablishment of relations with the oil-rich state comes despite the murder of journalist Jamal Khashoggi at the Saudi consulate in Istanbul in 2018, which was described in a UN investigation as an “extrajudicial killing for which Saudi Arabia is responsible.” ”.

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