FRANKFURT, Germany –
Oil cartel OPEC and its allies are cautiously increasing the amount of oil they send to the global economy, a decision that is likely to support prices that are at near seven-year highs. amid fears of a Russian military move against Ukraine.
The coalition of OPEC members led by Saudi Arabia and non-members led by Russia agreed to increase by 400,000 bpd in March. That aligns with the OPEC+ group’s plan to replenish that oil monthly and gradually restore deep cuts created during the coronavirus pandemic in 2020.
The move comes as oil prices hover near their highest levels since 2014, pushing up gasoline costs for motorists. US oil traded up 1.2% at $89.28, while international benchmark Brent crude was at $90.09, up 1%.
Prices at those levels have led to pressure to increase production from the US and other consuming countries, which in November announced a coordinated release of oil from national reserves, a move that did not work. much to curb price increases as the economy recovers. from the pandemic and consume more fuel for tourism and industry.
OPEC+ sticking to its plan will support oil prices, especially since some members are unable to meet their share of output. Higher oil prices are reverberating throughout the global economy due to higher consumer inflation in the US and Europe and more expensive fuels to heat, fly and drive.
American drivers are paying an average of $3.36 per gallon for gas, up 8 cents from a month ago and 94 cents from a year ago, according to the AAA motor club federation. In Germany, gasoline prices hit a record 1.71 euros per liter, or $7.31 per gallon. Taxes account for a larger share of gas prices in Europe.
The recent rise in oil prices has also been fueled by tensions in Eastern Europe, where instability around Russia and Ukraine has raised concerns that Russian oil supplies could be disrupted if diplomatic talks fail. break and US and European sanctions come into effect.
Russia is a major oil and gas producer. However, some analysts think that any sanctions imposed by the US and Europe will seek to provide backup energy.
Some OPEC members, such as Nigeria and Angola, have been unable to increase output due to slowing oil investment. That raises the question of whether countries that can produce more – such as OPEC leader Saudi Arabia, for example – can fill the void.
OPEC+ plays an important role in developing stable prices: While higher prices benefit state budgets in producing countries, members may not want to see them shoot above $100/ barrels, when they can begin to erode demand from traffic and industry.
