02.11.202111:18 Forex Analysis & Reviews: OPEC rejects call of US to ramp up production

Disagreement is brewing between OPEC and the United States as more alliance members reject President Joe Biden's call to ramp up production. Earlier, Biden requested the group to increase output to help lower gas prices.

On Monday, Kuwait joined Iraq, Algeria, Angola and Nigeria in the stance that the cartel should stick to its plan of gradually raising production. It mentioned that markets are currently well balanced, so there is no need to boost output.

Further discussion should take place this Thursday, when OPEC members meet to talk about further plans on the oil industry. At the moment, the key issue is the rise of prices to $ 85 a barrel. US gas is also at a seven-year high of $ 3.70 a gallon.

US, India, Japan and other importers are precisely the ones campaigning for OPEC to quickly ease supply restrictions imposed by last year's quarantines.

Although Biden declined to say how he would react if OPEC did not change course, many analysts suggested that the US might sell some of its strategic oil reserves.

After all, Angola Energy Minister Diamantino Azevedo said the monthly increase of roughly 400,000 is working out remarkably well, so there is absolutely no need for OPEC to deviate from this plan.

Many members, including Saudi Arabia, also argued that they should not pump oil faster because lockdowns in some countries still undermine demand. Additionally, several countries are yet to reach their production quotas after sharply cutting output last year. If the group raises their target, accomplishing it will be much more difficult.

Also, OPEC said the increase in crude oil exports will have little impact on the decline in electricity prices, which have risen sharply due to shortages of natural gas and coal in parts of Europe and Asia.

And although the group often surprises with its sometimes sudden policy changes, none of it directly opposed Biden's public comments, leaving some room to maneuver.

The dispute will arise when world leaders gather for COP26 climate talks in Glasgow. US already said it will push for more action to tackle climate change and will also try to ensure consumers are not undermined by higher energy prices.