Top oil producers stick with modest output boost despite pressure

Major oil producers on Thursday agreed to continue raising output moderately despite pressure from the United States and other big consumer nations to open up the taps much more decisively amid soaring prices.

The 13 members of the Organization of Petroleum Exporting Countries and their 10 allies said in a statement that they reconfirmed "the decision to adjust upward the monthly overall production by 0.4 (million barrels per day) for the month of December 2021".

The powerful producers led by Saudi Arabia and Russia in the so-called OPEC+ grouping gathered for less than two hours in their regular monthly meeting via videoconference.

Analysts had widely expected the grouping to re-affirm a decision in July to modestly step up production after slashing it steeply last year as the pandemic hit global markets.

The decision aimed "to ensure a stable and a balanced oil market, the efficient and secure supply to consumers," the statement said. 

The OPEC+ nations also pledged "to continue to adopt a proactive and transparent approach which has provided stability to oil markets." 

With prices for the benchmark WTI contract reaching $85 last week, the highest since 2014, US President Joe Biden appealed on the sidelines of the G20 summit in Rome over the weekend to OPEC to pump more. 

"The idea that Russia and Saudi Arabia and other major producers are not going to pump more oil so people can have gasoline to get to and from work, for example, is not right," he said.

Other oil-consuming nations, such as India and Japan, have also called for more output to lower prices.

Operating on limit

OPEC Secretary General Mohammed Barkindo last week reiterated "the need to remain cautious and attentive to an ever-evolving market situation," according to a statement.

While higher prices benefit producers in the form of increased revenues -- particularly after the lean period of the coronavirus pandemic -- there are concerns that they could stifle the fragile economic recovery and thus demand for oil.

There have also been question marks recently over the ability of OPEC+ members to drastically boost output.

"The consensus amongst investors is that OPEC+ will resist calls to speed up the pace of production increases because lots of the members are already operating on the limit of their production capacity," Ricardo Evangelista of ActivTrades said ahead of the meeting.

Contrary to the normal trend of OPEC countries exceeding their production quotas, in recent months most member states have stuck to them or in some cases even fallen short.

This suggests that the group may not be able to rapidly increase production in the short term despite it having a current theoretical reserve of more than four million barrels per day in the ground.

The next OPEC+ meeting is set for December 2.