Oil price edges higher despite increase in output
Crude oil prices rallied despite OPEC+ agreeing to increase daily output to meet growing global demand.
Producers will raise output from the planned 432,000 additional barrels a day to 648,000 from July, but the cartel did not exclude Russia over the invasion of Ukraine.
After the agreement, which is said to have followed pressure from the US, the price of crude reversed its losses in New York and was 0.7% higher at $116.03 a barrel.
It is thought prices rose because investors doubt that the group can commit to these goals as most of the countries will likely struggle to meet higher production targets.
Opec+, which comprises its 13 members and 10 non-Opec producers, led by Russia, made no mention of the conflict in its statement responding to growing demand. The sanctions on Russia by the west and the easing of Covid lockdowns around the world have added to pressure on fuel supplies.
Sanctions will see a 75% fall in the EU’s imports of Russian oil and 90% by the end of the year, though oil transported through the critical Druzhba pipeline will be exempt from the ban following exemptions granted to landlocked countries such as Hungary.
The EU has also reached an agreement with the UK to ban insurers from covering ships transporting Russian oil, in order to make it more difficult for the country to export energy supplies.
Russia’s production has dropped significantly since the invasion of Ukraine.
Its output was 1.3 million barrels a day below its OPEC+ target in April, according to the International Energy Agency.