OPEC+ May Be Of Little Help In Slashing Oil, Gas Prices

Oil prices are skyrocketing, and motorists are paying more at the pump. However, the OPEC+ oil cartel and its allies may not be much help when they decide how much additional petroleum to ship to global markets on Thursday, Cathy Bussewitz reported for the Associated Press.

Photo Insert: OPEC, led by Saudi Arabia, and its allies will decide whether to increase output beyond the 648,000 barrels per day increase agreed to at the group's last meeting in August.

This is because the OPEC+ alliance, which includes Russia, is struggling to produce enough oil to meet the rising demand for fuel since the COVID-19 outbreak. Furthermore, Western customers are avoiding Russian barrels due to the country's conflict in Ukraine, which means there is less oil on the market to go around.

OPEC, led by Saudi Arabia, and its allies will decide whether to increase output beyond the 648,000 barrels per day increase agreed to at the group's last meeting in August.

That increase was a small start toward bringing down skyrocketing prices. Previously, OPEC+ has been adding roughly 432,000 barrels per day every month to get oil back onto the market after drastically curtailing output during the peak of the pandemic.

Global gasoline costs have reached excruciating highs. In the United States, they reached $5 per gallon for the first time this month before falling in recent days as global oil prices plummeted due to recession fears.

U.S. President Joe Biden has been pressed to do anything he can to decrease fuel prices for low-income Americans, including lobbying Congress to suspend gas and diesel taxes, despite the fact that many experts say he has little power to do so.

OPEC+, on the other hand, could potentially help lower prices by increasing output. But just because Biden has asked the group to do so doesn't mean it will.

Production has fallen far behind OPEC+ quotas. Angola and Nigeria, for example, have long-standing deficiencies, and questions have been raised about how much spare production capacity Saudi Arabia and the United Arab Emirates have on hand.

According to Heather Heldman, managing partner of Luminae Group, there is also little motivation for OPEC+ countries to increase output even if they are able.

"At the end of the day," Heldman said, "they're worried about their economic bottom line, not the political fortune of a foreign leader." Furthermore, Biden is planning his first trip to Saudi Arabia as president, and both countries will want to announce something positive following the summit next month, according to Heldman.

“From the Saudi perspective and Emirati perspective, there’s really no need to make any meaningful gesture now,” she said.

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