OPEC+ agrees to boost oil supply from August; what does it mean for petrol, diesel prices?

Petrol and diesel consumers may now get some respite from the rising prices as global oil scenario is expected to ease in the coming days. OPEC+ nations on Sunday agreed to boost oil supply from August to cool prices which have climbed to 2-1/2 year highs ending an earlier dispute sparked by the United Arab Emirates that roiled global energy prices.

To overcome the disagreement, OPEC+ agreed new output quotas for several members from May 2022, including the UAE, Saudi Arabia, Russia, Kuwait and Iraq.

The Organization of the Petroleum Exporting Countries (OPEC) members have finally decided to raise output by 400,000 barrels per day (bpd) each month from August 2021 to help spur a global economic recovery as the pandemic eases, the Vienna-based group said in a press statement.

Slump in demand

OPEC+ last year decided to withdraw 9.7 million barrels per day (bpd) from the market amid a pandemic-induced slump in demand and collapsing prices. From August until December 2021 the group will increase supply by a further 2 million bpd or 0.4 million bpd a month, OPEC said in a statement.

Under the new production limits, the UAE would be able to produce up to 3.5 million barrels of crude oil a day beginning in May 2022. Saudi and Russia will see their baselines rise to 11.5 million bpd each from the current 11 million.

What’s next

With the evolving situation, analysts expect oil prices to fall below $70 barrel soon. At intercontinental exchange benchmark Brent crude is currently hovering at $73.59 a barrel. This may also bring the much needed relief from the sky high prices of domestic fuel which burning a hole in consumers’ pockets.