Officials from OPEC, Russia and other oil-producing countries decided on Wednesday to stick with their hard-won July agreement of increasing production each month by 400,000 barrels a day, a modest amount equivalent to less than 1 percent of global supply.
OPEC Plus meetings can sometimes go on for days, but this decision was reached in about an hour. Analysts say that the group is concerned about the future health of oil market as the pandemic continues to inject uncertainty into the global economy, but officials did not see an urgent need to make changes.
A time when summer vacations are ending and schools are just beginning to resume is not the most opportune for making a statement in the financial markets, analysts said.
“They are taking the path of least resistance in the short term,” said Richard Bronze, head of geopolitics at Energy Aspects, a research firm.
In a brief statement issued after the meeting, OPEC Plus said that although the effects of “the pandemic continue to cast some uncertainty, market fundamentals have strengthened.”
When it came down to it, the oil officials did not have enough clarity about the direction of demand for oil to make changes that might have irritated members of the group, like Russia and the United Arab Emirates, that want more production. Officials are worried about the impact of the Delta variant of the coronavirus on the economies of their customers, but the global recovery has not yet derailed.
OPEC Plus has also come under pressure from the Biden administration to pump more oil. Last month, Jake Sullivan, the national security adviser, said that higher gasoline prices “risk harming the global recovery” and said OPEC Plus “must do more.”
In addition, oil prices are at comfortable levels. They have risen through much of this year as pandemic lockdowns eased and economies began a boisterous expansion.
Prices fell sharply after the July agreement, causing concern that the production increase was too much, but they have recovered to about $71 a barrel for Brent crude, the global benchmark. Shutdowns in the Gulf of Mexico caused by Hurricane Ida as well as a large fire at a Mexican offshore facility have restricted supplies.
The meeting was the first after an arduous series of negotiating sessions in July that led to the deal to increase production by 400,000 barrels a day in each of the coming months. The producers also resolved a dispute with the United Arab Emirates over production ceilings.
With memories of that messy episode still vivid, OPEC Plus officials had little incentive to tamper with their agreed program.
If the supply increases continue as planned, OPEC Plus will add about two million barrels a day of oil to the market by year end. But there is doubt about whether the member states will have the capability of adding the full amount. The group will also continue to meet monthly, giving themselves time to react to a deterioration in demand.