The White House has asked the Organization of the Petroleum Exporting Countries (OPEC) to boost crude oil output, in an effort to contain rising fuel prices and reduce shortages.
According to CNBC, which cited a report from US National Security Advisor Jake Sullivan, the US government has called on OPEC+ to raise crude oil output in order to alleviate rising fuel prices. “We are engaging with relevant OPEC+ members on the importance of competitive markets in setting prices… Competitive energy markets will ensure reliable and stable energy supplies, and OPEC+ must do more to support the recovery.”
According to the report, Washington does not view OPEC’s latest decision to raise production output by 400,00 barrels per day as sufficient enough during the height of the Covid-19 pandemic recovery. The national average gasoline price stood at around $3.186 per gallon as of Wednesday, up by nearly $1 from a year ago, according to data from the American Automobile Association. In fact, the month of May saw fuel prices exceed the $3 per gallon mark for the first time since 2014.
According to media reports, US government officials met with representatives from Saudi Arabia, United Arab Emirates, as well as other OPEC members to discuss an additional output hike. Although OPEC+ has raised output levels since curbing production during the height of the pandemic last year, the cartel is still withholding approximately 6 million barrels per day, which it plans to phase into the market between August and December 2021.
In the meantime, US crude producers were also forced to reduce their output during the pandemic, and have yet to return to pre-Covid-19 levels. According to data published by the Energy Information Administration, oil output across the US was at around 11.2 million per day in May 2021, which is still below the 13 million barrels per day noted before the pandemic.
Information for this briefing was found via CNBC and the EIA. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.