If this proposal is agreed to by the OPEC Plus ministers, it
will come as a relief to the White House, which has been begging
OPEC—especially Saudi Arabia—for additional oil output as the United States
continues to battle high gasoline prices in the run-up to mid-term elections.
According to media reports, the Joint Ministerial Monitoring
Committee (JMMC) of the Organization of
the Petroleum Exporting Countries (OPEC) has recommended an increase in
production by 648,000 barrels per day (bpd) —higher than what was originally
agreed.
The proposed 648,000 bpd output increase would be for July
and another 648,000 bpd increase in August, all members of the JMMC were in agreement.
Under the proposal, OPEC+ would bring forward the planned
September hike and spread it across July and August, resulting in 648,000 bpd
increase in each of those months. There would be no planned hike, then, in
September.
Until Thursday, the overarching sentiment from the masses
was that OPEC’s JMMC would rubber-stamp the 423,000 bpd output increase that
was already baked into the agreement.
But
reports began to filter in, led by the Wall Street Journal that OPEC was
considering exempting Russia from the agreement. Those reports later morphed
into rumors that OPEC might agree to increase production to make up for what
would surely be Russia’s lost oil production in the wake of Western sanctions,
including the EU’s Russian oil import ban that was agreed to earlier in the
week.
The
proposal for a 648,000 bpd increase was discussed as being an overall increase
for the OPEC+ group, to be divided among its members equally. In reality, there
are numerous OPEC+ members that cannot meet their current quotas and are highly
unlikely to meet a new, even higher quota.
