OPEC+ will increase production targets for September by 100,000 bpd on the recommendation of the Joint Ministerial Monitoring Committee (JMMC), according to a report by Amena Bakr, Chief Opec Correspondent & Deputy Bureau Chief at Energy Intelligence.
Wednesday’s OPEC+ meeting was the first since the Cartel rolled back all of the cuts from May of 2020 in August. Analyst expectations had been for either a steady hold or a slight increase for September’s target.
In the lead up to the meeting, on Tuesday, the United States State Department had approved a potential military sale of Patriot MIM-104E Guidance Enhanced Missile-Tactical Ballistic Missiles (GEM-T) and supporting equipment for a rough cost of $3.05 billion to the Kingdom of Saudi Arabia. It also approved another sale of military equipment to the United Arab Emirates for $2.245 billion.
Saudi Arabia and the United Arab Emirates are the only oil producers presently in the world outside of Russia which have enough spare capacity to raise overall oil production. For this reason, analysts expect that a 100,000 bpd increase in the Cartel’s production target would ultimately only lead to a roughly 30,000 bpd increase from Saudi Arabia and a 10,000 bpd increase from the United Arab Emirates. It is expected other producers are at roughly full production capacity now, and will fail to meet any increase in their production quota.
President Biden has visited the Kingdom last month seeking assurances from the Kingdom there would be production increases. Earlier in the week, a Fox Business correspondent has reported Saudi Arabia would advocate for higher oil production at Wednesday’s meeting. Citing an unnamed source, Edward Lawrence reported Saudi Arabia’s King Salman had assured Joe Biden he would make the case during their meeting July 16th.
The meager 100,000 bpd raise is seen as a setback for the Biden administrations attempts to lower energy prices and fuel economic support as the Federal Reserve tackles inflation.
Oil prices were up following the announcement.
