OPEC and its allies announce the addition of more oil back to the market as demand recovers from the worst of the Covid-19 pandemic
HongKong - September 8, 2021 /MarketersMEDIA/ —
The collaboration of the OPEC oil producers' cartel and allied non-member countries led by Russia have signed off on the decision to gradually increase production as the global economy and demand for fuel recover after feeling the worst of the Covid-19 pandemic. The group was able to fend off pressure from the likes of the U.S., moving faster to restore production cuts made during the pandemic and potentially easing costs at the pump for American drivers.
Otherwise known as OPEC+, the group agreed at an online meeting to stick with earlier plans to add back 400,000 barrels per day from October 1. The cartel and its allies have restored deep cuts made last year when lockdowns and travel restrictions caused demand for fuel and prices to crater.
Prices have fallen ahead of the meeting with trimmed losses coming afterward. Oil was off 0.4% at $68.26 per barrel on the New York Mercantile Exchange, while Brent crude, an international benchmark, traded down 0.4% at $71.36 per barrel.
However, prices of oil have recovered from a slump to just above $62 for New York Mercantile Exchange crude on August 20.
The OPEC+ decision is in line with an earlier plan made public in July to add back 400,000 barrels a day each month until last year's cuts are restored next year. Saudi Arabia, a key OPEC member, has urged a cautious, step-by-step approach. The group has already started meeting monthly to monitor the market and production levels amid uncertainty about the contagious delta variant of the coronavirus and the possible economic setbacks in different parts of the world.
Adding too much oil to the market could cause prices to slip, as they briefly did in August while holding back production costs members money for their state budgets. The average price of gas in the United States was put at $3.17 per gallon, according to motoring federation AAA, compared to $2.32 per gallon a year ago, with the cost of crude oil accounting for about 50% of the price of gasoline at the pump.
Analysts have stated that the prices of gas might rise after refineries in the United States shut down during Hurricane Ida, even as the prices have remained steady so far.
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Source URL: https://marketersmedia.com/opec-steadily-adds-back-production-amidst-economic-recovery/89044790
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Release ID: 89044790
