OPEC considers an extra large rise in oil production to offset Russia

OPEC’s Joint Ministerial Monitoring Committee recommends an increase in production of 648,000 barrels per day, more than initially agreed, according to tweets from Amena Bakr, OPEC’s chief correspondent for Energy Intelligence.

The proposed production increase of 648,000 bpd would be for July and another increase of 648,000 bpd in August. All members of the JMMC agreed, according to reports.

According to the proposal, OPEC + would advance the expected rise in September and distribute it between July and August, leading to an increase of 648,000 bpd in each of these months. There would be no excursion planned, therefore, in September.

Until Thursday, the general sentiment of the masses was that the OPEC JMMC would mark the increase in production of 423,000 bpd that was already incorporated into the agreement. But reports began leaking, led by the Wall Street Journal, that OPEC was considering exempting Russia from the deal. These reports later turned into rumors that OPEC could agree to increase production to make up for what would surely be Russia’s loss of oil production as a result of Western sanctions, including a ban on imports of Russian oil from the United States. EU that was agreed earlier this week.

According to Amena Bakr, the proposed increase of 648,000 bpd was discussed as a global increase for the OPEC + group, which would be shared equally among its members. In reality, however, there are many OPEC + members who cannot meet their current quotas and are very unlikely to meet a new, even higher quota.

This increase, however, would allow Saudi Arabia, the United Arab Emirates and Iraq – all of which are believed to have excess spare oil production capacity – to increase production.

If OPEC + ministers accept this proposal, it will be a relief to the White House, which has been calling on OPEC, especially Saudi Arabia, for additional oil production while the United States continues to fight with the top gasoline prices in the run-up to the midterm elections.

Oil prices were on a downward trend Thursday morning ahead of the prospect of the group’s additional oil arrival.

By Julianne Geiger for Oilprice.com

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