Oil Prices Plunge As OPEC+ Considers Production Hike

OPEC’s de facto leader Saudi Arabia and OPEC+’s other members are discussing an oil production increase, OPEC delegates said on Monday, according to the Wall Street Journal.

The full group will meet next on December 4 to set out OPEC+’s production plans for January 2023—and the group is reportedly considering an increase of up to half a million barrels a day. The timing of the production target increase—if the group agrees to it—would be just one day before the effective date of both the EU’s Russian oil embargo and G7 oil price cap.

A production hike from the group would be a welcomed development for the Biden Administration, which has lobbied OPEC members to increase production over the last few months. Despite President Biden’s heavy-handed attempt at persuading the group to produce more, OPEC+’s October meeting ended with the group deciding to cut its oil production targets by 2 million barrels per day in the months of November and December.

While a half million barrel per day production hike for January would be a far cry from offsetting the 2 million bpd production cut, the actual production cut was thought to be substantially less—somewhere near 1 million bpd. While this new production hike is only half of that amount, the move could go at least part way toward mending broken fences between Saudi Arabia and the White House.

OPEC’s talk about production increases also comes on the back of another noteworthy fence-mending event. Last week, the Biden Administration called for immunity for Saudi Crown Prince Mohammed bin Salman in the ongoing lawsuit about his participation in the killing of U.S.-based Saudi journalist Jamal Khashoggi, arguing that his position as Prime Minister of the Kingdom should serve as a shield from such lawsuits. The move was generally seen as an olive branch.

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