OPEC agrees to increase production in face of Russian sanctions

June 2 (UPI) -- OPEC and its allies said Thursday it plans to increase oil production by 648,000 barrels per day in July and August, which could lead to a deal with the United States that could lower crude prices.

Oil prices, and in turn gasoline prices, have soared to record levels since Russia's invasion of Ukraine, which started in late February.

Economic sanctions in the United States and other countries could take much of Russia's oil off the market, creating an opportunity for major producers like Saudi Arabia.

The organization made the announcement in a statement at the 29th OPEC and non-OPEC ministerial meeting.

Saudi-led OPEC had rejected a push from the United States and its allies to increase oil production. The Biden administration, though, sent a delegation to Saudi Arabia last month in hopes of ironing out a deal.

OPEC has avoided addressing the Ukrainian invasion with Russia, a key OPEC ally, suggesting it has nothing to do with the market issues. Saudi Arabia and the United Arab Emirates have significant volumes of spare capacity that could be ramped up quickly, while others have regularly missed their output forecast.

"While we initially thought such a policy shift would likely coincide with a meeting between President Biden and Crown Prince Mohammed bin Salman, we now believe that the expiration of the OPEC+ agreement could potentially come at tomorrow's ministerial meeting," RBC strategists including Helima Croft said in a note late on Wednesday, according to Bloomberg.

"The remaining barrels could be added back in July and August," they said.

Russia has lost 10% of its production since the start of the Ukrainian invasion because of sanctions and could be hit harder if the European Union follows through with its threat to end its purchases because of the war.