Early reports out of Vienna, Austria, where OPEC ministers are meeting, suggest that the cartel and its production allies, including Russia, will likely announce an increase in combined crude production, potentially of 1 million b/d. In light of the refreshed U.S. sanctions on Iran’s oil industry and economic woes in Venezuela, the United States, China and India asked OPEC to increase output to prevent an oil deficit that has the potential to stifle economic growth in the latter half of 2018. The increase will occur ahead of this December’s dissolution of OPEC’s production reduction agreement, which has worked to reduce global oil supplies and increase the global price of crude since the beginning of 2017.
With the increase in crude production, crude oil prices are expected to decrease and in turn lower the cost of producing refined products, including gasoline. As reports on the exact details of the planned increase continue to emerge, current market prices for crude have increased. Some speculation has centered on whether or not the increases in production will be enough to dramatically reduce prices in the event that global supply is disrupted due to increasing volatility.