OPEC+ responds to Biden's visit with a "negligible" increase in production! Production increased slightly by 100,000 b/d in September

On August 3, OPEC+, a group of OPEC and its allies, decided to raise its oil production target by 100,000 b/d, equivalent to about
0.
1% of global oil demand.

OPEC data shows that 100,000 b/d will be the smallest increase since OPEC introduced quotas in 1982
.

After the resolution was announced
, the United States and the cloth both rose.
However, EIA data released later showed that EIA crude inventories in the United States unexpectedly increased by 4.
467 million barrels in the week to July 29, compared with an expected decrease of 629,000 barrels and a decrease of 4.
523 million barrels
in the previous month.
Under the haze of the global recession, coupled with the recent rising geopolitical conflicts, demand concerns caused crude oil to rise more than 2% and turn 4% down, U.
S.
oil fell to nearly $90, and crude oil lost $100
.

Biden's trip to the Middle East is empty?

U.
S.
President Joe Biden will begin traveling to Saudi Arabia on July 12 to meet with Gulf leaders and demand OPEC countries to increase oil production to reduce gasoline prices
.

Biden's conciliatory fist collision with Crown Prince Mohammed bin Salman gave the White House confidence, which had predicted that Saudi Arabia would take "further steps"
on oil production.
White House national security adviser Sullivan said that while Saudi Arabia and the UAE say they are largely unable to increase oil production, OPEC members should be able to take "further steps" to increase oil production
.

But on Wednesday, OPEC+ offered only a symbolic increase in supply and signaled that its power to help was limited
.

"It's too little to be meaningless
.
From a practical point of view, this is a small fluctuation
.
As a political gesture, it's almost an insult," said
Raad Alkadiri, managing director of energy, climate and sustainability at Eurasia Group.

Edward Moya, an analyst at U.
S.
foreign exchange broker OANDA, told that the smallest OPEC+ production increase in history will do little to solve the current global energy crisis
.

Han Tan, chief market analyst at Exinity, pointed out that increasing production by 100,000 barrels per day is a drop in the bucket
.
The Biden administration will probably be disappointed when it thinks of making overtures to Saudi Arabia, but it gets such an outcome, at least this time
.

OPEC spare capacity is limited

In addition to safeguarding its own interests, there is another important reason why OPEC will offer the "world's smallest increase in production", which is that the remaining production capacity is limited
.

It is believed that in addition to Saudi Arabia and the United Arab Emirates have sufficient spare capacity, most OPEC members' spare capacity cannot achieve large-scale production increase plans, which is why Biden's last trip to the Middle East focused on meeting with Gulf leader Saudi Arabia

OPEC+ is currently increasing production by about 430,000 to 650,000 b/d per month, however, it has struggled to meet its 100% increase target because most members have no capacity to increase production due to years of underinvestment in new capacity
.

OPEC+ said in an Aug.
3 statement that limited spare capacity requires careful use in response to severe supply
disruptions.
The organization will hold its next meeting
on 5 September.

OPEC+ also said that a chronic lack of investment in the oil sector will affect sufficient supply
to meet growing demand beyond 2023.

OPEC+ insiders, speaking on condition of anonymity, also mentioned the need to work
with Russia as part of the broader OPEC+ bloc.

"[Today's decision] is to appease the United States
.
And the increase in production is not too large, and it is not going to upset Russia," an OPEC+ source said
.

According to the survey, 13 out of 23 OPEC+ observers believe OPEC+ will keep output stable next month, and the remaining 10 expect production increases of between 200,000 b/d and 1 million b/d; OPEC members, led by Saudi Arabia, are also more likely to keep production steady in September than to agree to increase production
.

The RBC Capital Markets strategist believes that although US President Biden's visit to Saudi Arabia did not immediately bring results in oil production, he believes that Saudi Arabia will continue to gradually increase production in return
.
If more oil is not provided to the market, it will undoubtedly be very disappointing
for the United States.