OPEC on Friday reached a deal to boost oil production to lower prices that have more than doubled since January 2017, member countries announced after concluding a meeting in Vienna.
The oil cartel and nonmember countries, including Russia, agreed to increase output by 1 million barrels per day beginning in July.
Because the amount is measured proportionately to all members of the agreement, even those who don’t have the ability to boost production, the real increase will be about 700,000 barrels a day. The countries did not agree to individual quotas, but rather are aiming to meet a collective ceiling of oil production.
The Trump administration had pressured OPEC to boost production after 18 months of cuts because higher global oil prices have led to rising gasoline prices for U.S. drivers.
“Hope OPEC will increase output substantially. Need to keep prices down!” Trump tweeted Friday morning after OPEC announced the agreement to raise production.
U.S. gasoline prices are largely based on the global oil market. The price of oil neared $80 per barrel in May, and the average price for a gallon of gas approached $3.00.
Trump has tweeted twice in recent weeks that oil prices are too high. He blamed OPEC and Russia’s agreement in January 2017 to cut production by 1.8 million barrels per day in order to boost slumping oil prices. OPEC said countries will increase oil production gradually.
“I don’t think anyone should expect an immediate slug of crude to the market,” said Saudi Arabia Energy Minister Khalid Al Falih.
Some major oil-producing countries would struggle to raise output. Iran is facing renewed oil sanctions after the U.S. departed the nuclear deal with Tehran, and Venezuela is suffering from a political and financial crisis that has dramatically limited production there.
Iran this week threatened to veto a deal to hike oil production, blaming U.S. policy for rising prices, but it relented.
United Arab Emirates Energy Minister Suhail al-Mazrouei, an ally of the Saudis, told reporters that OPEC could achieve its new goal.
“We will work hard to ensure what the conference has agreed to is achieved by the duration,” he said. “OPEC is not targeting a price and will never target a price. What we will target is market stability. We are not targeting to harm any of our customers. Hopefully we will impress you with the confidence to achieve what we say.”
OPEC and nonmember countries including Russia on Saturday will meet again to ratify Friday’s agreement.
