In July 2021, as economies began recovering from the COVID-19 pandemic, OPEC plus agreed to increase oil production as a way of mitigating rising gas prices and easing the demand-to-production ratio. This came after the initial agreement between OPEC and its allies was denied, leading to a spike in oil prices.
Key fact: In 2021, U.S. oil prices reached their highest level in six years, with West Texas Intermediate prices rising 2.3% to nearly $77.62 per barrel
According to the new agreement, 400,000 barrels of oil will be returned to the market per day from August to December, increasing the global supply by 2%.
But concerns have been mounting over the pickup of this oversupply. The U.S. government data and the U.S. Energy Information Administration revealed that crude stockpiles were declining rapidly, while the demand for gas was also lagging behind. This has put pressure back on oil prices even though oil production continues to rise.
Key fact: Gas stocks increased by around one million barrels, while expectations were for a 1.8 million barrel drop
Lowers gas prices
Eases demand-to-production ratio
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