The group, known as OPEC+, said it would add 432,000 barrels per day in May, as it works to gradually restore production cuts made during the depths of the coronavirus pandemic. That’s slightly up from 400,000 barrels in previous months, with officials saying they’re revising baseline production levels.
The alliance has been unmoved by pleas from oil-consuming countries to pump more oil as energy prices soar, fueling inflation worldwide. High prices have helped Russia — the world’s largest exporter with 12% of the global market — offset some of the economic pain from Western sanctions over its invasion of Ukraine.
The U.S. and European sanctions have dealt a severe blow to Russia’s economy but contain exceptions for energy payments. That is a U.S. concession to European allies who are much more dependent on Russian energy than the U.S., which has banned the import of Russian oil. Europe by contrast gets 40% of its natural gas and 25% of its oil from Russia, and officials there have shied away from a boycott, instead aiming to reduce dependency through conservation and boosting wind and solar energy as fast as they can over the next several years.
Oil prices have risen as global demand rebounded for fuel for cars, trucks and airplanes. The war pushed them ever higher over fears Russian oil might be lost to the market if sanctions tighten.
They have a major influence on how much U.S. drivers pay at the pump, with crude oil accounting for about half the price of a gallon of gas. To combat high gasoline prices — averaging $4.24, up $1.38 from a year ago — U.S. President Joe Biden is preparing to order the release of up to 1 million barrels per day from strategic petroleum reserves, with an announcement expected as soon Thursday.
Diesel fuel for trucks, farm equipment and factories has also jumped in price, to a U.S. average of $5.25 per gallon, up $2.02 from a year ago, according to the U.S. Energy Information Administration.
In November, the White House announced the release of 50 million barrels in coordination with other countries, and after the war began, the U.S. and 30 other countries agreed on an additional release of 60 million barrels.
Oil prices slumped on expectations of a new release, but analysts at UniCredit bank said the impact of such moves on prices “is usually short-lived.” That’s because reserves are finite, and the production shortfall is open-ended. Once reserves fall below a certain level, the market might fear they would be insufficient to combat a further shortfall and prices would go up.
U.S. oil prices were down 6.3%, to $100.99, while international benchmark Brent crude dropped 5.6%, to $107.50.
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