The world's biggest oil producers, OPEC+ have defied global pressure to significantly increase their output. This led to oil prices sliding by 4% to near 6-month lows. Despite president Joe Biden’s trip to Saudi Arabia last month, the group of nations only agreed to increase output by 100,000 barrels per day in September. It’s one of the smallest increases in its history, equivalent to around a minute-and-a-half of daily demand.
The increase offers little respite for consumers suffering from the inflationary squeeze of high oil prices. OPEC+ had shown some goodwill toward consumers in recent months, fast-tracking the production increases in July and August that completed the reversal of their Covid-era curbs. Saudi ramped up output to 10.78 million barrels a day last month, according to a Bloomberg survey, a level pumped only on rare occasions.
Why it matters
The announcement by OPEC+ comes as little surprise to analysts who predicted that the output for bpd would be minimal. The move is seen to be a wider geopolitical power play. Some felt that Joe Biden's visit to Saudi Arabia last month was a thawing of relations and help the western power battle back against its 40-year high inflation. On the other hand, others have said that Opec members were struggling to meet existing production goals anyway, with only Saudi Arabia and the UAE having any wiggle room at all.
