[Herald Economy’s Kim Young-cheol] Bloomberg News and others reported on the 5th (local time) that eight countries under the Organization of the Petroleum Exporting Countries (OPEC) and the OPEC+ alliance of major oil-producing nations have agreed to increase oil production by 206,000 barrels per day next month.
Energy ministers from eight countries, including Saudi Arabia, Russia, Iraq, the United Arab Emirates (UAE), Kuwait, Kazakhstan, Algeria, and Oman, reached this agreement in a virtual meeting today.
This decision to increase production is expected to be symbolic given the disruptions in oil production and transportation caused by the bombing of oil facilities due to the Middle East war and the closure of the Strait of Hormuz. Despite being somewhat benefited from the Middle East war, Russia finds it challenging to significantly increase production due to the daily bombing of its oil facilities by Ukraine.
Reuters reported that the production increase target set for today accounts for less than 2% of the supply blocked by the Hormuz blockade. The International Energy Agency (IEA) has identified that over 12 million barrels of oil supply per day have been halted. Before the war, global oil supply exceeded 100 million barrels per day.
However, Bloomberg assessed that the production increase decision indicates an intention to resume production as soon as hostilities subside.
In a separate statement, the OPEC+ Joint Ministerial Monitoring Committee (JMMC) expressed concern over attacks on energy infrastructure, stating, “It takes significant cost and time to restore damaged energy assets to full production capacity.”
Of the 22 OPEC+ member countries, the 8 with significant market influence have been increasing production since last year by reversing voluntary production cuts made twice in 2023. After suspending production increases in the first quarter of this year, they decided on the first day of last month, the second day of the Middle East war, to increase production by 206,000 barrels per day this month.