OPEC+ alliance boosts oil production as energy prices soar

Jun 2, 2022, 4:52 AM | Updated: Jun 3, 2022, 6:21 am

LONDON (AP) — The OPEC oil cartel and allied producing countries including Russia will raise production by 648,000 barrels per day in July and August, offering modest relief for a global economy suffering from soaring energy prices.

The cost of oil, which began to rise sharply to start of the year, spiked after Russia’s Feb. 24 invasion of Ukraine. U.S. crude prices are now up 54% since the beginning of the year, and international crude prices are up almost 40% in that time.

Gasoline prices have risen in tandem and hit another all-time high in the U.S. Thursday.

That’s become a potential problem for U.S. President Joe Biden in mid-term Congressional elections this fall.

Elevated prices are also a threat to the global economy as it emerges from the pandemic, with both companies and families potentially reducing activity to deflect those costs.

OPEC, whose de facto leader is Saudi Arabia, had for months resisted pressure from the White House to increase oil supply more quickly. That stance, along with a European Union agreement to end most oil imports from Russia, has pushed prices higher. Gasoline and diesel prices have also been rising due to a lack of refining capacity to turn crude into motor fuel.

The US “welcomes” the increased production, White House press secretary Karine Jean-Pierre said in a prepared statement. “The United States will continue to use all tools at our disposal to address energy prices pressures.”

Biden administration officials have recently visited Saudi Arabia for talks on energy supplies and regional security issues.

The decision Thursday steps up the pace by the alliance, known as OPEC+, in restoring cuts made during the worst of the pandemic recession. The group had been adding a steady 432,000 barrels per day each month to gradually restore production cuts from 2020.

The increase did not appear to ease concerns about tight supply and oil prices actually rose after the decision was announced Thursday.

U.S. crude, which had fallen by as much as $3 per barrel early in the day, reversing course and traded up almost 2% at $117.15. International benchmark Brent rose 0.7% at $117.02. Market traders may have expected more from the meeting, such as an indication from Saudis that they could make up for any shortfall due to sanctions against Russia.

Instead the alliance’s statement merely mentioned reopening from COVID-19 lockdowns in “major global economic centers” and the end of seasonal maintenance work at refineries as justifications for the incremental increase. Lockdowns in Shanghai and Beijing have sapped fuel demand in China.

OPEC+ decisions have been complicated by the group’s failure to meet its production targets due to underinvestment and other roadblocks in some member countries. Actual production has lagged the scheduled increases.

The U.S. saw a record high average gasoline pump price on Thursday of $4.71 per gallon, according to AAA. The price of crude makes up about half the price of gasoline at the pump in the U.S., and prices could go even higher as the summer driving season gets under way. High gas prices for drivers are a potential factor in U.S. politics with mid-term Congressional elections approaching later this year.

In Germany, the government has sought to soften the blow to consumer finances from energy inflation by launching deeply discounted transit passes that enable unlimited use of local trains, subways and buses for 9 euros ($10) per month.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

(Facebook Photo/City of San Luis, Arizona)...
Associated Press

San Luis authorities receive complaints about 911 calls going across border

Authorities in San Luis say they are receiving more complaints about 911 calls mistakenly going across the border.
4 days ago
(Pexels Photo)...
Associated Press

Daylight saving time begins in most of US this weekend

No time change is observed in Hawaii, most of Arizona, Puerto Rico, the U.S. Virgin Islands, American Samoa, Guam and the Northern Marianas.
12 days ago
Mexican army soldiers prepare a search mission for four U.S. citizens kidnapped by gunmen in Matamo...
Associated Press

How the 4 abducted Americans in Mexico were located

The anonymous tip that led Mexican authorities to a remote shack where four abducted Americans were held described armed men and blindfolds.
12 days ago
Tom Brundy points to a newly built irrigation canal on one of the fields at his farm Tuesday, Feb. ...
Associated Press

Southwest farmers reluctant to idle farmland to save water

There is a growing sense that fallowing will have to be part of the solution to the increasingly desperate drought in the West.
19 days ago
A young bison calf stands in a pond with its herd at Bull Hollow, Okla., on Sept. 27, 2022. The cal...
Associated Press

US aims to restore bison herds to Native American lands after near extinction

U.S. officials will work to restore more large bison herds to Native American lands under a Friday order from Interior Secretary Deb Haaland.
19 days ago
(Photo: OCD & Anxiety Treatment Center)...
Sponsored Content by OCD & Anxiety Treatment Center

Here's what you need to know about OCD and where to find help

It's fair to say that most people know what obsessive-compulsive spectrum disorders generally are, but there's a lot more information than meets the eye about a mental health diagnosis that affects about one in every 100 adults in the United States.

Sponsored Articles

(Photo: OCD & Anxiety Treatment Center)...

Here’s what you need to know about OCD and where to find help

It's fair to say that most people know what obsessive-compulsive spectrum disorders generally are, but there's a lot more information than meets the eye about a mental health diagnosis that affects about one in every 100 adults in the United States.
(Desert Institute for Spine Care in Arizona Photo)...
Desert Institute for Spine Care in Arizona

5 common causes for chronic neck pain

Neck pain can debilitate one’s daily routine, yet 80% of people experience it in their lives and 20%-50% deal with it annually.
...
Day & Night Air Conditioning, Heating and Plumbing

Prep the plumbing in your home just in time for the holidays

With the holidays approaching, it's important to know when your home is in need of heating and plumbing updates before more guests start to come around.
OPEC+ alliance boosts oil production as energy prices soar