The world’s major oil exporters have agreed to raise their production slightly, to help ease soaring prices. However, members of the oil producers’ group Opec+ — which includes Russia — are not planning to increase output to the levels requested by oil-importing countries.
What is Opec+?
Opec+ is a group of 23 oil-exporting countries that meets every month in Vienna to decide how much crude oil to sell on the world market. At the core of this group are the 13 members of Opec (the Organisation of Oil Exporting Countries), which are mainly Middle Eastern and African countries. Opec was formed in 1960 as a cartel, with the aim of fixing the worldwide supply of oil and its price.
Today, Opec nations produce around 30% of the world’s crude oil, about 28 million barrels a day. Saudi Arabia is the biggest single oil producer within Opec, producing more than 10 million barrels a day. In 2016, when oil prices were particularly low, Opec joined forces with 10 non-Opec oil producers to create Opec+. Those new members included Russia, which also produces over 10 million barrels a day. Together, these nations produce about 40% of all the world’s crude oil.
OPEC has always tried to stabilize Oil Markets.
As far back as the 1960’s OPEC has always tried to stabilize demand for crude. In spring 2020, as Covid spread around the world and countries went into lockdown, the price of crude oil crashed because of a lack of buyers.
Producers were paying people to take the oil off their hands because they didn’t have enough space to store it all. After this, Opec+ members agreed to slash production by 10m barrels a day, to help drive the price back up. In June 2021, with demand for crude beginning to recover, Opec+ started gradually increasing supply, putting an extra 400,000 barrels a day onto world markets. In July and August, it will supply an extra 600,000.
However, it is still supplying some two and a half million barrels a day less than in spring 2020. When Russia invaded Ukraine, the price of crude soared to well over $100 a barrel, because of panic in the markets.
This has caused significant rises in the price of petrol at the pumps. Right now, OPEC has refrained from increasing supply radically, although it…