Major oil producers reached an agreement on Sunday to increase production. United Arab Emirates and Saudi Arabia Earlier this month, the dispute that was blocking the agreement was resolved.
The agreement paved the way for OPEC Plus to begin pumping more oil, as the group is known. This could help ease the potential pressure on supply as the global economy continues to prepare after the pandemic blockade.
Under the agreement, OPEC Plus will increase monthly production of 400,000 barrels indefinitely from August.
With this arrangement, Emirates will be able to get most of the production quota increase it was looking for, but not until April next year. Other countries, including Kuwait, Iraq, Saudi Arabia and Russia, will also be allowed to raise production limits, according to an OPEC statement.
agreement End standoff Between Saudi Arabia, the de facto leader of the cartel, and the Emirate Federation, which has invested heavily in expanding oil production and has opposed group production restrictions.
After the group failed to reach an agreement earlier this month Oil price It soared and hit a six-year high on July 6th. The price increase Gasoline prices and inflation Generally in the United States and other regions.
The agreement also appears to be reviving Saudi Arabia, the world’s largest oil producer, as a dominant influence over a group of 23 members.
“We are here to stay,” Saudi Arabia’s oil minister, Prince Abdulaziz bin Salman, said at a press conference after the group meeting. “What connects us is far beyond what you can imagine.”
However, it is not yet known how long OPEC Plus will be held together.
This month’s long series of unsuccessful negotiations may herald a change that, along with Russia and its allies, could drive a wedge between members of the group, including OPEC. In the short term, if the economic effects of the pandemic continue to ease and demand for oil increases, countries capable of increasing production may seek the freedom to pump more oil.
The environment that OPEC has been operating for a long time is also changing. In organizational calculations, curbing production and seeking higher prices was a wise strategy. Because there is always a demand for the vast resources that members still have on the ground.
But climate change has disrupted its business strategy.The· Deadly flood in Europe Last week was the latest weather disaster that urged lawmakers to call for stricter rules on greenhouse gas emissions. Some countries that rely on fossil fuels as their primary source of income for the government are willing to turn their reserves into cash.
Jim Krane, Fellow of the Baker Institute at Rice University, said:
OPEC Plus agrees to increase oil production, ending conflict with UAE
Source link OPEC Plus agrees to increase oil production, ending conflict with UAE