The Organization of the Petroleum Exporting Countries (OPEC) and its crude-producing allies, OPEC+, agreed to maintain their production plan, despite calls from other countries to increase output to cool global energy markets.
At the ministerial meeting Thursday, via videoconference, officials reaffirmed their commitment to continuing their program to gradually raise crude production by 400,000 barrels per day each month.
The 13-member cartel plans to phase out the rest of the production cuts instituted last year in response to the public health crisis and collapsing demand.
The White House slammed the move, accusing OPEC and its partners of being "unwilling" to use their power to assist in the global economic recovery.
“Our view is that the global recovery should not be imperiled by a mismatch between supply and demand,” said a spokesperson for the White House’s National Security Council. “OPEC+ seems unwilling to use the capacity and power it has now at this critical moment of global recovery for countries around the world.”
But some market analysts think that America's energy policy is more to blame for skyrocketing prices than OPEC's decision to keep output subdued.
Still, the results of the monthly meeting did not surprise financial markets.
"Prices are rising as the market expects a moderate supply increase instead of an acquiescence to calls by the U.S. and other oil producers to bring on more supply sooner," said Louise Dickson, the Senior Oil Markets Analyst at Rystad Energy, in a note to clients. "However, while OPEC+ top producers Saudi Arabia, Russia, Iraq, Kuwait, and UAE all remain unified in sticking to the supply tapering plan of 400,000 bpd, repeated calls from the U.S., Japan, India, and other oil importers add an element of external pressure that could tip the scale."
Crude futures were in positive territory midday. December West Texas Intermediate (WTI) futures picked up $0.13, or 0.16 percent, to $80.99 per barrel on the New York Mercantile Exchange. January Brent futures rose $0.41, or 0.5 percent, to $82.40 a barrel on London's ICE Futures exchange.
How Will the World Respond?
President Joe Biden has been urging OPEC to escalate output to help ease high inflation rates worldwide. He reiterated this position Sunday at the G20 meeting in Rome, telling reporters that OPEC+ is essentially to blame for the substantial increase in energy prices across the globe."The idea that Russia and Saudi Arabia and other major producers are not going to pump more oil so people can have gasoline to get to and from work, for example, is not right," the president stated.
Biden’s remarks came soon after he pushed G20 energy-producing nations with additional capacity to expand production.
"It's a tool that's under consideration," Granholm noted.
Previous U.S. administrations have released crude from domestic reserves to cut oil prices. Phillip Streible, the chief market strategist of Blue Line Futures, told The Epoch Times that the United States would need to touch its inventories as the economy continues to reopen and demand for oil and gas rises.
"The U.S. put themselves in a bad situation by not expanding our energy independence. They really took a step back," he said. “After Trump left, they went with this whole green energy initiative. We saw U.S. oil production pretty stagnant at 11.3 million barrels per day. When Trump was in office, we were the largest producer."
Many market analysts have forecast that crude could touch $100 a barrel again. Should prices increase to this point, would this prompt OPEC to increase production levels?
“OPEC is truly just a business,” Streible explained. “The only product many of these countries have is just oil.”
The commodities expert noted that many of these nations went into deep levels of debt, particularly when crude prices slipped into subzero territory.
“It is in your best interest to elevate prices as high as possible,” he added. “So, I think $90, $100 is completely possible for crude oil.”