OPEC+ snubs Biden’s diplomacy with ‘minuscule’ oil-output hike

Diplomatic+ snubbed months of efforts from US President Joe Biden with one of the smallest oil production increases in its history.

The cartel will add only 100,000 barrels a day of oil in September, giving a tight market extra supplies at a much slower pace than in recent months despite pressure from the White House to help cool prices.

The 23-nation alliance will divide that amount proportionally between members, and with only the Saudis and the United Arab Emirates able to bolt production, just a fraction of the amount is likely to be delivered. For July and August, the group had pledged to add more than 600,000 barrels a day to the market.

The increase offers little respite for consumers suffering the inflationary squeeze of high oil prices. Brent crude erased earlier losses, rising 1.6 per cent to US$102.12 a barrel as of 1:52 pm in London.

“From a global balance perspective, today’s minuscule quota increase — the smallest since 1986 in absolute terms and smallest ever in percentage terms — is noise,” said Bob McNally, president of Washington-based consultant Rapidan Energy Group and a former White House official. “Though if pump prices keep falling, the White House will likely claim credit.”

Ministers endorsed the proposal at an online meeting on Wednesday, according to a statement on the OPEC website. There were no discussions about whether the Organization of Petroleum Exporting Countries and its allies would keep increasing production beyond September, delegates said.

After Biden’s trip to Saudi Arabia, US officials said they were optimism that Riyadh and Washington were on a path toward reconciliation. During his visit, when he greeted Crown Prince Mohammad bin Salman with a fist bump, the president said he expected further steps from the kingdom in terms of oil production. Late on Tuesday, the US approved the sale of US$3.05 billion of weapons including Patriot missiles to the Middle East heavyweight.

OPEC+ had shown some goodwill toward consumers in recent months, fast-tracking the final production increases that completed the reversal of their Covid-era curbs. But the alliance appeared to have little appetite to go much further.

Prior to the talks, delegates privately indicated that they were reluctant to add supplies when oil demand is constrained by the threat of recession in the US and Covid lockdowns in China. The Saudis ramped up output to 10.78 million barrels a day last month, according to a Bloomberg survey, a level pumped only on rare occasions that leaves limited spare capacity.

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