Members of the OPEC oil producing group and allied countries led by Russia signed off Wednesday on gradually increasing production as the global economy and demand for fuel continue to recover from the worst of the coronavirus pandemic.
The group, known as OPEC+, agreed at an online meeting to stick with earlier plans to add back 400,000 barrels per day from Oct. 1.
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The group and its allies are gingerly restoring deep cuts made last year, when lockdowns and travel restrictions caused demand for fuel and prices to crater.
Oil prices were trading lower ahead of the meeting. The price of oil fell 1.6 percent to $67.40 per barrel on the New York Mercantile Exchange, while Brent crude, an international benchmark, fell 1.4 percent to $70.67 per barrel. Prices have recovered from a slump to just above $62 for New York Mercantile Exchange crude on Aug. 20.
The decision tracks with a plan forged in July to add back 400,000 barrels a day each month until last year’s cuts are restored next year. The group has started meeting monthly to keep close watch on the market and production levels amid uncertainty about whether the more contagious delta variant of the coronavirus will present further economic setbacks in different parts of the world.
Led by Saudi Arabia, OPEC+ has taken a step-by-step approach. Adding too much oil to the market could cause prices to slip, as they briefly did in August, while holding back production costs members money for their state budgets.
The Biden administration has urged OPEC to increase production faster, saying that higher gasoline costs risk harming the ongoing global recovery.
The average US price for a gallon of gas at the pump was $3.17 on Wednesday, according to motoring association AAA. That compares to $2.32 per gallon a year ago. The cost of crude oil accounts for about half the price of gasoline at the pump.
Analysts said gas prices might rise after refineries in the United States shut down during Hurricane Ida, but they so far have remained relatively steady.