Saudi Arabia is among the nations agreeing to boost crude output, including the Saudi Aramco oil pipe lines in Jubail. Photo by Suresh Babunair/Wikimedia Commons
July 18 (UPI) -- The Organization of the Petroleum Exporting Countries and its Russia-led oil-producing allies agreed Sunday in Dubai, United Arab Emirates, to boost production by 400,000 barrels a day in an effort to increase capacity before the COVID-19 pandemic began March 2020.
Known as OPEC+, the alliance also includes Saudi Arabia, Iraq and Kuwait.
The producers will increase beginning next month and continue through the latter part of 2022, The Wall Street Journal reported. Market conditions will be assessed in December.
"The conference noted that oil demand was clearly showing signs of improvement and that market fundamentals were continuously strengthening," Opec + said in a statement.
With the economy improving, price have risen amide shortages and supply delays.
Abu Dhabi's baseline for oil production will increase from 3.16 million barrels per day to 3.5 million barrels per day. And Saudi Arabia's output will go from 11 million to 11.5 million barrels per day.
On July 1, West Texas Intermediate crude, the international oil benchmark, has soared to more than $75 a barrel for the first time in three years. At the start of this year, oil was around $48.50 per barrel. WTI crude was $71.45 on Friday and Brent crude was $73.30.
At the start of the month, the average price for a gallon of unleaded gasoline was at $3.123 per gallon, compared to $2.179 per gallon a year ago, according to AAA.
"During the month of June, we estimate that the market was in a 2.3 million barrel per day deficit... The bottom line, demand is surging as we head into the summer travel season, and that is against a nearly inelastic supply curve," Jeff Currie, global head of commodities research at Goldman Sachs, said on CNBC's Worldwide Exchange.