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OPEC agrees to produce a bit more oil as recession fears loom

The Organization of the Petroleum Exporting Countries and its allies – including Russia – also known as OPEC+, said on Wednesday it would produce an additional 100,000 barrels a day in September.

It was the first OPEC meeting since US President Joe Biden. visited Saudi Arabia last month. Biden has urged the country – which is the group’s biggest oil producer – to start pumping more.
For months, prices have soared as Western Russian oil embargoes have a limited global supply. These awards have helped the world’s largest oil companies reap record profitseven as millions face rising fuel bills.

The price of Brent crude, the global benchmark, also peaked at $139 a barrel in March in the days following Russia’s invasion of Ukraine, but Brent now trades around $100 as traders fear a global recession could hurt demand.

Brent crude and West Texas Intermediate crude – the North American benchmark – both rose almost 2% on Wednesday after OPEC’s announcement, with oil investors expecting a bigger increase in production.

Oil stocks ‘at a critical level’

Still, OPEC on Wednesday expressed concerns that global supply will not be able to meet demand after 2023.

He said emergency oil stocks among the 38 countries belonging to the Organization for Economic Co-operation and Development, which includes the world’s largest economies, are currently at their lowest level in more than 30 years.

Last month, the International Energy Agency warned in a report that “global oil inventories remain extremely low” and posed a particular risk to emerging economies.

For months, OPEC+ has tried to reverse production cuts made during the pandemic as oil demand in craters.
In June, the cartel agreed to increase supply to compensate for a drop in Russian oil trade – that month the European Union agreed to reduce imports of Russian crude 90% before the end of the year.
OPEC+ agreed to increase production by 648,000 barrels per day in July and August. But, according to a Reuters poll earlier this week, many countries failed to deliver on their promises.

On Wednesday, OPEC said the productive capacity of many of its members was “severely constrained” due to “chronic underinvestment in the oil sector”.

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