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The Organization of Petroleum Producing Countries (OPEC) announced last Thursday, (05/05), an increase in oil production worldwide. The organization has now determined an increase to 432,000 barrels per day by member countries, due to low international demand for the product. This is a strategy aimed at expanding the offer for the commodity throughout the international market throughout the month of June.
During Thursday's meeting with the countries that are part of the organization, OPEC announced to the global market that it will increase oil production to 432,000 barrels a day in June. This will happen as a way to circumvent the low demand for the product and encourage an increase in the supply of the commodity within the international market, so that companies turn their eyes to the resource.
The organization highlighted that the decision to increase oil production was taken after a great observation of the “ongoing effects of geopolitical factors and issues related to the ongoing pandemic”. In this regard, there have been some events that have lowered demand for the commodity in recent months and OPEC needs to reverse the situation. This was the second increase in the year 2022, as the organization had already increased production by 432,000 barrels per day, following a sequence of highs of 400,000 barrels per day in the final months of 2021.
Finally, OPEC spoke with the countries that are part of the organization so that there is compliance with production and strong investment in new incentives to increase this chain. With this, nations will need to maintain the strategy of increasing the supply of the commodity until the end of next month, following the guidelines of OPEC. In addition, the organization announced an upcoming meeting for the beginning of June to discuss future scenarios in relation to oil production and the global market.
The last increase in oil production carried out by OPEC had already been made due to the international geopolitical scenario during the month of March. Thus, the increase to 432,000 barrels a day this month was in response to weak Chinese demand for the commodity. That's because the country was going through new lockdowns and closing of the Marketplace due to internal problems, but little by little the nation is recovering.
Now, the decision of a new increase in oil production came as a result of the ban made last Wednesday on imports of Russian oil within six months and refined products of the commodity until the end of the year. Thus, economic sanctions cause even more uncertainty within OPEC regarding the supply and demand for oil in the global market during the coming months of the year.
Thus, although the organization continues to try to take strategies that reverse the situation, the countries that are part of OPEC still need to follow the risk recommendations so that the supply of the commodity does not continue as the current scenario. However, the cartel is optimistic about the plan to increase oil production next month.
