Jakarta, CNBC Indonesia – The United States (US) pressured OPEC+ to produce more oil to cool soaring prices. However, new problems arise when the oil-exporting cartels don’t have much capacity to raise production faster, even when they want to do so now.
OPEC+ has actually opened up production curbs made in 2020 when demand weakened. But it’s not fast enough for the US, which is concerned about prices approaching three-year highs.
The organization of the oil-producing countries chose to stick with its plan to gradually increase production by 400,000 barrels per day (bpd) per month, starting in August. This step is considered sufficient for OPEC+, which considers an increase in production faster will lead to a surplus in 2022.
In fact, with the production rate which is considered sluggish by the US, OPEC+ has not been able to achieve its production target. OPEC+ production is still 700,000 bpd short of its September and October targets, according to the International Energy Agency (IEA).
The fall in investment in oil production due to the pandemic and environmental pressures, especially in poorer OPEC countries, is the reason the target was not met.
As a result, only the three OPEC conglomerates, Saudi Arabia, the United Arab Emirates and Iraq, were able to provide the extra capacity to increase production more quickly.
This fact raises the prospect of tight supply and high oil prices in the future.
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