OPEC+ agrees to higher oil production ‘to support oil market stability’ – National
After the Iran war choked off about a fifth of the world’s oil supply for several months, the world’s largest alliance of oil-producing nations agreed to increase its quota by another 188,000 barrels per day starting next month.
Higher oil supplies can often translate to lower gas prices for consumers filling up at pumps.
The Organization of the Petroleum Exporting Countries (OPEC+) said in a statement Sunday after having a regular meeting that seven of its 12 member nations — Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman — agreed to the voluntary production increase.
The Iran war caused chaos for global energy markets as supplies of oil, liquid natural gas, fertilizer, helium and other resources became constrained and risked spiking inflation — including in Canada.
Higher oil prices during the conflict caused consumer gas prices to reach near record levels during the Spring.
OPEC+ said those core nations came to the decision “in their collective commitment to support oil market stability.”
Although the alliance has hiked their output quotas from April through July by almost 800,000 barrels per day, production levels are still playing catchup.
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OPEC+ output fell to 33.13 million barrels per day in May, according to OPEC data, from 42.77 million barrels per day in February. It began to recover in June thanks to U.S. efforts to help the UAE and other OPEC+ nations export more oil, but is still below pre-war levels.
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Less available oil amid heightened demand for things like gasoline and jet fuel drives up costs for those products, which in turn can send a ripple effect to just about everything else getting more expensive.
Oil prices have been on the decline since Middle East tensions began easing last month, and after the U.S. and Iran signed a peace agreement.
The Strait of Hormuz, a narrow shipping channel in the Persian Gulf region, normally sees about 20 per cent of the world’s oil and other supplies pass through on a daily basis, but the Iran war brought most container traffic at the strait to a near standstill for several months.
Since the peace agreement was signed last month, ships have started moving through the strait once again. However, it will be some time before oil and gas prices stabilize after several months of armed conflict.
The U.S. oil price, or West Texas Intermediate, sits below $69 per barrel as of publication, and that’s down from over $90 less than a month ago, and down from a recent peak of about $113 in April.
As of publication, the national average for regular gasoline in Canada was about $1.61 per litre, according to CAA, and down more than a dime from a month earlier. While that’s still well above the $1.35 from one year ago, it’s also much less than this year’s peak so far of $1.90, seen in May.
OPEC+ will meet again to discuss oil markets and production levels for September on Aug. 2.
– with a file from Reuters.
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