In a 16-minute meeting, the shortest in its history, the OPEC+ group approved the next planned collective production increase of 400,000 barrels per day (bpd) of crude oil, defying some analysts’ expectation of a greater increase due to resurgent oil prices. No press conference was scheduled for after the meeting.
Ahead of the monthly meeting, OPEC’s Joint Technical Committee came to the conclusion that it still expects a 1.3 million bpd (barrels per day) surplus of crude oil this year, which perhaps explains its reluctance to raise production further at present. In addition, due to reduced investment in new oil exploration and maintenance of existing assets, some OPEC+ countries may struggle to produce enough oil to meet their current quotas, despite the incentive provided by high oil prices.
PVM analyst Tamas Varga spoke to Reuters about the reasons driving the rally in oil prices, explaining:
“The oil market is currently unreservedly bullish. It is international tension, the perception of tight supply and the cold winter that are the most important factors behind the strength.”
With the OPEC+ group cautious about increasing production, it falls to producers outside the group to increase oil production. The currently high oil prices may well tempt oil producers in the US like ExxonMobil and BP, the makers of Mobil and Castrol lubricant products, to pump more oil, especially in the prolific Permian Basin of Texas and New Mexico.
The price of Brent Crude briefly rose to above $90 per barrel following the meeting, before dropping back below this threshold.