Pace of oil production increases should be kept, Opec+ says

A panel of Opec+ ministers recommended sticking to their current pace of gradual production increases, disregarding US President Joe Biden’s demand to go faster.

The group’s joint ministerial monitoring committee, which oversees Opec+ production cuts, recommended a 400,000 barrel-a-day supply increase for December, delegates said. That’s a pace that major consumers say is too slow to sustain the post-Covid economic recovery, contributing to an increase in crude prices of about 30% since August.

Opec and its allies are now considering the recommendation at a full ministerial meeting. If the cartel rejects US pleas to boost oil supply, it could face a bare-knuckle fight with the White House, amid growing speculation that the US could tap emergency crude stockpiles in an effort to drive down prices. 

Brent crude, the international benchmark, pared gains as was trading up 1.8% at $83.48 a barrel as of 2.11pm in London. 

What happens in the coming weeks will have major implications for a global economy that has been battered by high energy prices, and for the domestic political agenda of a president whose popularity is sinking as inflation rises. The showdown also puts further strain on America’s increasingly fragile relationship with its strongest Middle Eastern ally — Saudi Arabia.

Even if Opec+ doesn’t change its plan, there could be some room for the group to accelerate the pace of supply increases, if it wishes. In the last few months, the group has consistently failed to hit its own output targets due to production woes at members including Nigeria and Angola. Other nations, such as Saudi Arabia and the United Arab Emirates, have sufficient capacity to pick up the slack, although their deal hasn’t had any mechanism for doing so. 

The group was scheduled to hold a media conference on Thursday afternoon, delegates said.

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