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Eight Organisation of the Petroleum Exporting Countries +member countries, on Saturday, announced a sharp increase in oil production for the month of June, at the risk of driving down already very low prices.
Saudi Arabia, along with Russia and six other members of the oil cartel, will implement a production adjustment of 411,000 barrels a day out of the ground, as in May, according to an OPEC+ statement, whereas the initial plan called for an increase of just 137,000 barrels.
Numbering a total of 22 countries, most of which are highly dependent on oil, the group had until recently been exploiting supply scarcity to boost prices, holding millions of barrels in reserve.
“OPEC+ has just thrown a bombshell to the oil market,” Jorge Leon, analyst with Rystad Energy, told AFP.
“Last month’s decision was a wake-up call. Today’s decision is a definitive message that the Saudi-led group is changing strategy and pursuing market share after years of cutting production,” he added.
That about-face will also provide an opportunity to build good relations with Donald Trump’s United States, he went on.
Shortly after taking office in January, Trump called on Saudi Arabia, which heads the cartel, to up production in order to bring prices down.
Last month, the group slightly lowered its forecast for oil demand growth, citing the impact of US tariffs on the world economy.
OPEC in 2016 came up with OPEC+ to strengthen its weight on the global market.
The eight countries that have agreed to additional increases are Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman.
AFP
