OPEC Plus agrees to increase oil production, easing pressure on supplies and prices


Gary Ross, managing director of Black Gold Investors, an oil trading company, agreed. “The United States must be quite happy with the deal,” he said. “This shows that OPEC will increase supply to meet growing potential demand.”

Where the prices go from here is a subject of intense debate. Some analysts say that even with more oil from OPEC Plus, markets are expected to remain tight in the coming months. Brent crude, the international benchmark, closed at just over $ 73 a barrel on Friday. Goldman Sachs predicts it could hit $ 80 a barrel this summer, and other forecasters say hitting the $ 100 mark in the coming years is a very real possibility.

Other analysts say there is a lot of potential supply that could be released to cap any price hikes. “There is a huge amount of spare capacity in OPEC Plus countries,” said Michael Lynch, distinguished fellow of the Energy Policy Research Foundation in Washington. Mr Lynch says recent highs in oil prices could turn out to be a peak for some time.

Tom Kloza, global head of energy analysis for the Oil Price Information Service, a data provider, said gasoline prices could drop later in the year when demand drops, at unless hurricanes cause refinery failures. “Overall, prices will be lower nationally than what we are currently seeing,” he said.

Whether OPEC Plus can remain united despite the major changes occurring in the energy markets is another question. The Saudis essentially ceded to the Emirates, leaving their neighbor in the Persian Gulf to increase their production quota that they were looking for, but not until next April. Other countries, including Kuwait, Iraq, Saudi Arabia and Russia, will also benefit from an increase in the baselines from which their production limits are calculated, according to the OPEC statement.

The group gave in to a Saudi demand to extend the global production agreement until the end of 2022.

The deal ended a deadlock between Saudi Arabia, the de facto cartel leader, and the Emirates, which has invested heavily in expanding oil production and has come up against the group’s production limits.