In a closed-door video meeting, representatives from the OPEC+ group of oil-producing countries agreed to increase their total production of crude oil by 100,000 barrels per day.
In the US, shale operators like ExxonMobil, the owner of the Mobil lubricant brand, have helped make the country the world’s biggest oil producer. An official at the US administration welcomed the move but added that the President would like to see further increases.
The small increase is likely less than many had hoped for, however, following French President Emmanuel Macron and US President Joe Biden’s visits to Mohammed bin Salman. JPMorgan Analyst Christyan Malek told the Financial Times that Saudi Arabia was in a tricky position because it was attempting to:
“Balance calls from its western allies for higher oil production against the need to keep its spare capacity in reserve in case output falls sharply elsewhere in the coming months. This small increase will not materially change the balance of the market but they cannot be accused of doing nothing.”
OPEC is cautious about eating into its excess capacity too much because this would hinder its ability to respond to any future supply shocks. The organization also warned that there had been inadequate investment in finding and developing oil reserves, and this could affect its ability to meet increased demand in 2023.
The price of Brent Crude rose above $100 per barrel in response to the news but ended the day down 4% at $96.50, substantially below the $120 seen in June.