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Hopes of falling oil prices dashed as OPEC+ agrees to boost token production | business news

Hopes of a meaningful fall in global oil prices were dashed after a large group of oil-producing nations, including Russia, agreed to increase volumes at a much lower rate than requested.

The United States had asked the OPEC+ cartel to increase production by at least 300,000 barrels per day (bpd) in order to lower prices.

They began rising steadily from pandemic lows as economies restarted after COVID restrictions, but surged amid the Russian war in Ukraine, compounding fears that supply might not be able to meet demand.

But the cartel – which is led by Saudi Arabia – and its allied non-members said on Wednesday they would collectively increase their oil production target by 100,000 barrels a day.

Brent crude traded slightly higher on the news at just over $100 a barrel, while US crude futures slipped slightly to $94.

While the US had asked the group to increase production, spare capacity is limited and Saudi Arabia may be reluctant
Increased production at the expense of OPEC+ partner Russia, which has been hit by Western sanctions over the Ukraine conflict.

Ahead of the meeting, OPEC+ cut its forecast for this year’s oil market surplus by 200,000 bpd to 800,000 bpd, according to Reuters.

Global oil prices are one of the drivers of inflation in western economies.

While Russia is among the largest producers, it has been the fall in its natural gas exports to Europe that has exacerbated the inflation problem.

State-owned Gazprom has reduced production in its core Nord Stream 1 pipeline to just 20% of capacity and is threatening to leave continental Europe with a shortage heading into the important winter season of high demand.

Wholesale prices in the UK have also risen in sympathy due to the larger battle to secure more stock.

Hopes of falling oil prices dashed as OPEC+ agrees to boost token production | business news

Source link Hopes of falling oil prices dashed as OPEC+ agrees to boost token production | business news

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