Major oil-producing countries in their most recent meeting have agreed to bolster their production capacity, with the aim of lowering prices and reducing pressure on the global economy.
Opec countries and its Russian counterparts will boost the supplies starting from August after prices rose to two and a half years high during the coronavirus period.
Rise In Crude Prices
This new decision should have an easing impact on the fuel prices at the pump, which are also in free rise currently.
Brent crude oil prices have risen 43% this year to almost $ 74 a barrel.
Last year, the Opec countries reached an agreement to cut production of 10 million barrels per day (bpd) due to the fall in demand caused by the pandemic and falling prices.
However, this year oil prices have risen as the global economy slowly reopens, contributing to inflation and the threat of global recovery.
OPEC Members Disagreements
Oil producers have been seeking to reduce cuts, but tensions between Saudi Arabia and the United Arab Emirates threatened to disrupt plans in early July.
Abu Dhabi has blocked a proposal made by Riyadh and Moscow to extend the extraction limits to 2022 after Abu Dhabi’s demand for more oil production was also declined by others.
The rare public disagreement among Saudi Arabia and the UAE had ignited fears about the stability of the “Opec +” group, which controls more than 50% of the world’s oil production.
The New Decision
Under the new agreement, Opec and partners have agreed to increase the supply of an additional two million barrels per day from August to December 2021 to help stabilize the market.
Higher output quotas have also been agreed for several members from May 2022, including the UAE, Saudi Arabia, Russia, Kuwait and Iraq.
Cartel said it would end in September 2022 the cuts in oil production that were introduced last year.
