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OPEC+ is expected to stay on course to increase oil production

#OPEC #expected #stay #increase #oil #production

Big oil producers, led by Saudi Arabia and Russia, are expected to hold on to a previously agreed output increase at their meeting on Thursday, despite pressure to keep increasing production.

Russia’s invasion of Ukraine has exacerbated oil supply concerns, sending prices to record highs this year.

Immediately after an EU ban on Russian oil imports over the invasion, the OPEC+ cartel agreed to open the taps wider than expected at its last meeting in early June.

But prices remain elevated and analysts say there is no respite in sight when the 23 members of OPEC+ meet via video conference from 1100 GMT.

“We should expect a stamp,” said Jeffrey Halley, an analyst at Oanda. “Given that OPEC+ cannot even meet its current targets and hasn’t for a long time, I don’t expect any bearish surprises.”

The 13-member Organization of the Petroleum Exporting Countries, chaired by Saudi Arabia, and its 10 partners, led by Russia, slashed production in 2020 as the coronavirus pandemic and resulting lockdowns slumped demand.

They have been gradually increasing production again since May of last year. In recent months, the US and other top oil consumers have stepped up pleas to open the tabs wider.

But several OPEC+ members have failed to meet production quotas while Iran and Venezuela – and now Russia – are locked in sanctions.

– ‘Political Theatre’ –

The United Arab Emirates said this week it is close to its oil production ceiling, ahead of a regional visit by US President Joe Biden, who is expected to advocate an increase in production.

Biden will visit neighboring Saudi Arabia, the world’s largest oil exporter, as part of his tour next month.

“President Biden’s July trip to Saudi Arabia is primarily for political theater and will not really result in any significant increase beyond the projected OPEC+ boost of 648,000 barrels per day of supply in July and August,” Edward Moya said. another analyst from Oanda.

On Monday, at the meeting of the G7 industrial nations’ club in Germany, French President Emmanuel Macron was caught on camera giving Biden details of a conversation with UAE leader Sheikh Mohamed bin Zayed Al-Nahyan.

According to Macron, Sheikh Mohamed said the UAE was at its “maximum” capacity and Saudi Arabia was also facing a limit to ramping up production.

G7 leaders agreed to work on a price cap on Russian oil to cut Kremlin revenues.

As prices soar, OPEC, formed to “ensure stabilization in oil markets,” is sticking to its strategy.

“There is little chance that OPEC will do anything to relieve the market,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.

Analysts have warned only a recession could be able to bring prices down.

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