Why OPEC’s Higher Output Pledge Won’t Bring Down Pump Prices

The group of major oil producers has announced a planned production increase, but significant challenges remain.

Why OPEC’s Higher Output Pledge Won’t Bring Down Pump Prices

While OPEC’s decision to increase oil production might have some short-term effect on global oil prices, the group isn’t a “swing producer,” said Steve Reese, CEO of Reese Energy Consulting Co. (Source: Shutterstock.com)

OPEC+’s agreement to add 50% more crude production to global supply addresses the Biden administration’s lobbying effort, but insiders say the supply shift is unlikely to meet the U.S. President’s goal of lowering gasoline prices.

Higher prices at the pump are likely here to stay for at least the next few months, Baker Botts Partner Carina Antweil told Hart Energy.

“Inflationary prices at the U.S. pump are being driven in large part by a lack of refining capacity. Even if production were to increase substantially, there is no more U.S. refining capacity to process that crude and get it to the pump,” Antweil said.

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Faiza Rizvi

Faiza Rizvi is a senior editor of ESG for Hart Energy's editorial department, with a strong focus on E&P Plus and HartEnergy.com. She has been covering all facets of the U.S. and international energy industry for over 5 years.