At its latest meeting, the OPEC+ group of oil-producing nations agreed to stick with its existing plan for gradual production increases. The group will therefore increase its total production by 648,000 barrels per day (bpd) for August.
Back in April 2020, following the onset of the COVID-19 pandemic, the group, which includes OPEC and some non-member participants, agreed to remove some 10 million bpd from the oil markets. It has since been gradually unwinding that cut as the global demand for crude oil has returned.
Nevertheless, high crude oil prices combined with the effects of the war in Ukraine have led many to call for greater production, so at its previous meeting, the OPEC+ group decided to accelerate this process by raising the planned production caps for July and August from around 400,000 to 648,000.
Speaking at a media roundtable before the group met, Ben van Beurden, the CEO of energy and lubricant company Shell, said that the tightness in the oil and gas markets was generating a certain amount of fear in the markets that was in turn driving up oil prices:
“I think it is probably fair to say there is a little bit of a fear factor in the oil price at the moment but by and large, it is also true that there is limited spare capacity.”
The CEO also said that while he didn’t have knowledge about the degree of OPEC’s spare capacity, he suspected it was less than what many people hoped or believed.
