Analysis by Energy Workforce President Tim Tarpley
OPEC+ on Sunday agreed to extend all current production curbs into next year. This will mean that they will remain through the US election. OPEC+ currently has production curbs that equate to 3.66 million barrels a day. In addition to the already existing cuts, the new deal includes the UAE adding to their current production quota by 300,000 barrels a day. The new quota by the UAE will be gradually phased in starting in January and will increase to 3.519 million barrels a day by September 2025. Eight top producers in the group also vowed to continue voluntary cuts on their own into 2025, totaling around 2.2 million barrels a day. They will remain at this level for three months and then gradually ease down.
The move will certainly have implications for production and politics in the United States. Some oil futures watchers had been speculating that some traders were getting in position to sell off oil futures which would lower prices. This may have been a factor in the move by OPEC +. Additionally, inflation remains a serious concern in the United States, and the affordability of products and services continue to be a top issue among large swaths of voters. We can expect consumer prices to be at the forefront of the Presidential debates and a major component of both sides messaging as we move through the summer.
It is our hope that this move will encourage the Biden Administration to speed up lease sales on federal lands and waters and take other steps to encourage US domestic energy production. US production can be used to maintain ample supply both domestically and to our friends and allies abroad despite decisions made by OPEC + or other producing regions.
Tim Tarpley, Energy Workforce President, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.
