OPEC ignores Biden’s plea, formalizes December oil output plan
(Bloomberg) --OPEC and its allies will stick to their slow pace of oil-production increases, disregarding U.S. President Joe Biden’s demand to go faster.
After a brief meeting on Thursday, the group approved a 400,000 barrel-a-day production hike for December, delegates said. That’s a pace that major consumers say is too slow to sustain the post-Covid economic recovery, with the U.S. asking for as much as double that amount.
The cartel could now face a bare-knuckle fight with the White House, amid growing speculation that the U.S. could tap emergency crude stockpiles in an effort to drive down prices. Crude futures erased some of their earlier gains, trading 1.4% higher at $81.97 a barrel as of 10:41 a.m. in New York.
What happens in the coming weeks will have major implications for a global economy that has been battered by high energy prices, and for the domestic political agenda of a U.S. president whose popularity is sinking as inflation rises. The showdown also puts further strain on America’s increasingly fragile relationship with its strongest Middle Eastern ally -- Saudi Arabia.
There could still be some room for the group to accelerate the pace of supply increases, even within the constraints of Thursday’s agreement. In the last few months, OPEC+ has consistently failed to hit its own output targets due to production woes at members including Nigeria and Angola.
Other nations, such as Saudi Arabia and the United Arab Emirates, have sufficient capacity to pick up the slack, but Thursday’s meeting didn’t detail any mechanism for them to do so, delegates said, asking not to be named because the talks were private.