OPEC and its oil-producing allies agreed on Thursday to hike output in July and August by a larger-than-expected amount as Russia’s invasion of Ukraine wreaks havoc on global energy markets.
OPEC+ will increase production by 648,000 barrels per day in both July and August, bringing forward the end of the historic output cuts OPEC+ implemented during the throes of the pandemic.
The group has been slowly returning the nearly 10 million barrels per day it agreed to pull from the market in April 2020.
In recent months, output has risen between 400,000 and 432,000 barrels per day each month. Oil prices reversed early losses and traded higher at 9:45 a.m. on Wall Street.
West Texas Intermediate crude futures, the U.S. oil benchmark, added 0.75 percent to trade at $116.13 per barrel.
International benchmark Brent Crude was 0.5 percent higher at $116.90 per barrel. The decision comes as the world grapples with surging energy prices.
In theory, output should increase as a result of the recent move, but OPEC+ has been struggling to meet production quotas.
Moreover, the additional barrels slated to hit the market will not make up for the potential loss of more than one million barrels per day from Russia as nations around the world ramp up sanctions following the invasion of Ukraine.