OPEC+ pledged on Thursday to increase oil production further after resisting repeated calls by the Biden administration and other nations to do so to tame high prices.
The cartel, which includes nonmember Russia, committed to raising its collective production by 648,000 barrels per day beginning in July, a roughly 200,000-barrel-per-day increase from its recent monthly production increase targets.
The group’s announcement said members took into account reopening from lockdowns “in major global economic centers,” likely referring to China. It also said it expects global refinery intake to increase following maintenance.
The announcement is big news for the oil market, as prices have stood well above $100 per barrel since the war in Ukraine began.
As recently as May 24, Saudi Arabia argued the market is “balanced” and didn’t need additional production, language OPEC has also used for several months in declining to move its production increase target beyond about 400,000 barrels per day.
“As far as we are aware, there is no shortfall of oil,” said Prince Faisal bin Farhan Al Saud, Saudi Arabia’s foreign minister.
“It’s much more complex than just bringing barrels to the market,” he also said. “Our assessment is that, actually, oil supply right now is relatively in balance.”
Other Saudi leaders have said the problem was a shortage of refining capacity across the globe, rather than a shortage of oil, an assessment with which the Biden administration and the broader Group of Seven countries disagreed.
The G-7 on Friday released conclusions from a meeting of national energy ministers, finding “tightening international markets” and pressuring OPEC for more oil.
The White House welcomed the decision by OPEC+ to increase production.
“We recognize the role of Saudi Arabia as the chair of OPEC+ and its largest producer in achieving this consensus amongst the group members,” press secretary Karine Jean-Pierre said in a statement. She said the United States “will continue to use all tools at our disposal to address energy prices pressures.”
The cartel’s announcement coincides with a new record gas price. As of Thursday, U.S. drivers are paying $4.715 per gallon, on average, according to the American Automobile Association.
First published in Washington Examiner