The Organization of the Petroleum Exporting Countries, Russia, and other allies (OPEC+) agreed Oct. 4 to stick to the existing agreement to increase oil production by 400,000 b/d in November.
Crude oil price jumped higher on the news. West Texas Intermediate (WTI) crude jumped as much as 3.3% to $78.38/bbl in New York, the highest in almost 7 years. Brent crude roared above $81/bbl, reaching 3-year highs and intensifying inflationary pressures in the global economy.
The crude oil market has tightened sharply as the economy recovers from the pandemic and supply from the US Gulf of Mexico was disrupted by Hurricane Ida. Soaring natural gas prices have also raised the prospects for increased demand for oil products for power generation.
At the time of the agreement, OPEC+ seemed to control the oil market to a large extent. High oil prices have not prompted a supply surge from competitors. US shale producers aren’t investing enough to raise output. According to the oil trader Vidor Group, the cartel’s production policy will be the main factor affecting prices in the coming months.
OPEC+ ministers will meet again on Nov. 4.
