OPEC and allies reject Biden plea to open up oil taps to cool down prices

The Organization of Petroleum Exporting Countries and its allies led by Russia have decided to keep decreasing their collective oil output cuts by 400,000 barrels per day during the next month, sticking to their original plans.

The group and additional states, known as OPEC+, rejected calls from the US and other major oil-consuming nations, including Japan and India, for a boost in crude production to meet rising demand, calls renewed after nations around the world began rolling back Covid-related restrictions.

The club of oil-producing states will boost total production by 400,000 bpd in December, OPEC said after a brief meeting in Vienna. It did not address issues relating to several African OPEC members, such as Nigeria and Angola.

Some African nations are currently struggling to meet their own output quotas amid sheer lack of investment and faltering infrastructure. If OPEC+ were to boost output, these countries would reportedly lose revenue. 

The agreed pace of ramping up output is seen as too slow to sustain the post-pandemic economic recovery, according to major oil consumers. Meanwhile, Washington, which might tap its emergency crude stockpiles in an effort to drive prices down, has been asking for as much as double that amount.

OPEC+ reaffirmed its previous commitment “to ensure a stable and a balanced oil market, the efficient and secure supply to consumers and to provide clarity to the market at times when other parts of the energy complex outside the boundaries of oil markets are experiencing extreme volatility and instability, and to continue to adopt a proactive and transparent approach which has provided stability to oil markets.” 

Global benchmark Brent crude was trading at $80.87, up 0.41% as of 10:56 GMT, while US benchmark West Texas Intermediate (WTI) crude futures edged up 0.88% to $79.50.

The gradual increase in OPEC+ output over the course of next year, along with growth in non-OPEC oil output, will flip the oil market into a surplus, according Capital Economics, which estimates that the price of Brent will drop to around $60 per barrel at the end of 2022. 

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