OPEC+ has been slowly returning the nearly 10 million barrels per day it agreed to pull from the market in April 2020.
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A group of some of the world’s most powerful oil producers on Thursday agreed to stick to a planned output increase in August, defying calls to pump more barrels to cool red-hot crude prices.
OPEC and non-OPEC partners, a group sometimes referred to as OPEC+, concluded a meeting via videoconference by deciding to stay the course with its production policy.
It means the Middle East-dominated group will increase monthly overall production for the month of August by 648,000 barrels per day.
OPEC+ said its next meeting would take place on Aug. 3.
At the group’s last gathering at the start of the month, OPEC+ decided to raise output by 648,000 barrels per day in both July and August, bringing forward the end of the historic output cuts implemented during the throes of the coronavirus pandemic.
The decision was welcomed by U.S. President Joe Biden’s administration at the time, which has repeatedly pushed for the group to pump more.
OPEC+ has been slowly returning the nearly 10 million barrels per day it agreed to pull from the market in April 2020. In recent months, production has risen between 400,000 and 432,000 barrels per day each month.
Oil prices slipped on Thursday afternoon amid concerns about global supply tightness. It comes amid the suspension of Libyan oil exports from key ports and a fall in output in Ecuador due to ongoing protests.
Analysts and energy executives questioned whether OPEC+ members had as much spare capacity as some market participants hoped.
“We are seeing an ever tighter oil and gas market appearing — and we are feeling that right now. I think it is probably fair to say there is a little bit of a fear factor in the oil price at the moment but by and large, it is also true that there is limited spare capacity,” Shell CEO Ben van Beurden said Wednesday at a media roundtable ahead of the OPEC+ meeting.
“And, of course, I cannot know how much spare capacity OPEC would have but it is not as much as what a lot of people hope or think is my estimation.”
Earlier in the week, French President Emmanuel Macron said he had been told by the UAE’s president that both the UAE and Saudi Arabia could barely increase oil production.
Macron was heard telling Biden on the sidelines of the G-7 summit that UAE leader Sheikh Mohammed bin Zayed al-Nahyan was already at maximum production capacity, while OPEC kingpin Saudi Arabia could only increase by around 150,000 barrels per day.
“I have believed for some time that the estimates for spare capacity held by the likes of Saudi Arabia and the UAE have actually been inflated and when push comes to shove they can’t put as much into the market very quickly as analysts previously thought,” Neil Atkinson, independent oil analyst, told CNBC’s “Squawk Box Europe” on Thursday.
“It could well be that UAE and Saudi might have 1.5 million barrels per day or so between them at a push but the problem we have got of course is there is no transparency,” Atkinson said.
“This is a big problem and Macron may have perhaps been closer to the truth than many people perhaps realized,” he added.
Clarification: This article has been updated to make clear that OPEC+ agreed to increase production by 648,000 barrels per day for the month of August.
— CNBC’s Weizhen Tan & Pippa Stevens contributed to this report.