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OPEC+ alliance endorses slight increase in oil production

Saudi Arabia, the UAE and other have largely resisted US calls to boost production but settled on a marginal increase today.

An alliance of world oil producers decided today to modestly boost production. 

The Organization of Petroleum Exporting Countries (OPEC) held its monthly meeting with non-OPEC allies today, including Russia. They agreed to increase collective oil production by 432,000 barrels a day, according to a press release. 

The alliance of OPEC, Russia and other allies is often referred to as OPEC+. 

Why it matters:  Global oil prices have increased significantly this year, in large part due to the chaos in energy markets resulting from the Russian invasion of Ukraine. The United States has repeatedly called on major oil producers to boost production to bring prices down. Saudi Arabia, the United Arab Emirates and other OPEC members have declined to do so thus far. 

Gulf states, which depend on oil for revenue, are benefitting from the price increase.

OPEC+ also kept to its modest monthly increases in April and May

Saudi Arabia, which is the largest oil producer in OPEC, appears unwilling to budge. Saudi Crown Prince Mohammed bin Salman told US national security adviser Jake Sullivan last year to forget about a production increase after Sullivan brought up the murder of Saudi columnist Jamal Khashoggi, The Wall Street Journal reported last month. 

Saudi Arabia, the UAE and other Gulf states are concerned about the Iran nuclear deal and are likely to stick to existing production agreements amid US calls for an increase in oil production. 

The price of Brent crude oil — considered the global benchmark for oil prices — traded at around $110 a barrel as of 11:30 a.m. ET today. Brent crude began the year below $80 a barrel, for comparison. Prices did fall somewhat last month as COVID-19 cases rose in China. 

What’s next:  OPEC+ will meet again on June 2.