Oil cartel OPEC and its allies have agreed to add 100,000 barrels a day of crude in September giving a tight market extra supplies but not enough to cool prices analysis show.
This is despite pressure from the United States for OPEC to ramp up production to rein prices above $100 per barrel fueling inflation across the world.
The 23-nation alliance will divide that amount proportionally between members, and with only the Saudis and the United Arab Emirates able to bolster production, just a fraction of it is likely to be delivered.
OPEC members including Nigeria, Liberia and Angola among others are having capacity challenges and may be unable to meet agreed output levels. Nigeria has been unable to meet its output levels since last year.
“The Meeting noted that chronic underinvestment in the oil sector has reduced excess capacities along the value chain,” OPEC said in a statement.
Oil ministers in the OPEC+ pact reached the deal at an online meeting on Wednesday according to a statement from OPEC.
There were no discussions about whether they would keep increasing production in subsequent months, delegates said. The group meets again on Sept. 5.
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For July and August, the group had pledged to add more than 600,000 barrels a day to the market. This has helped to cool prices that skyrocketed with the war in Ukraine and underinvestment.
The group notes that the severely limited availability of excess capacity necessitates utilizing it with great caution in response to severe supply disruptions.
“The Meeting highlighted with particular concern that insufficient investment into the upstream sector will impact the availability of adequate supply in a timely manner to meet growing demand beyond 2023 from non-participating non-OPEC oil-producing countries, some OPEC Member Countries and participating non-OPEC oil-producing countries,” the statement said.
Brent crude erased earlier losses and was little changed at $100.59 a barrel as of 3:10 p.m. in London.
US President Joe Biden had recently visited Riyad in a bid to improve relations which broke down after the US accused Saudi Arabia of killing Jamal Khashoggi, a Washington Post columnist.
Late on Tuesday, the US approved the sale of $3.05 billion of weapons including Patriot missiles to Saudi Arabia. But that seems to have little effect.
OPEC+ had shown some goodwill toward consumers in recent months, fast-tracking the production increases in July and August that completed the reversal of their Covid-era curbs. Saudi Arabia ramped up output to 10.78 million barrels a day last month, according to a Bloomberg survey, a level pumped only on rare occasions.
OPEC+ delegates said before the meeting that they saw no immediate need to replace supplies from coalition member Russia, which have proven robust despite sanctions over its invasion of Ukraine. Opening the taps freely could also have strained relations with Moscow.
