US instructs OPEC to increase fuel production to curb oil prices; OPEC indicates denial

Washington/Riyadh: – As fuel prices in the United States continue to rise, the Biden administration has instructed the OPEC group of fuel-producing countries to increase production. However, in its monthly report, OPEC has indicated that it will reject the US demand for increased production. At the same time, the International Energy Agency (IEA) has warned that fuel demand is set to fall again in the wake of the growing Coronavirus spread.

OPEC and OPEC Plus member countries decided to reduce fuel production during the Corona outbreak. Fuel production was cut by about one million barrels per day. But now that fuel demand is back on track, fuel-producing countries have stepped in to boost production. Last month, it was decided to increase crude oil production by four lakh barrels per day from August.

However, the United States has expressed dissatisfaction with the decision taken by fuel-producing countries. The United States instructed the oil-producing governments to increase production, saying that the global economy is recovering and the turning point is now. Against this backdrop, the decision to increase output from August has not been enough. The market needs to be competitive for rates to be fixed. Only then can there be a stable and reliable supply of fuel. For the situation to return to normal, OPEC plus member states need to play a greater role’.

US National Security Adviser Jake Sullivan released this statement. Earlier, US President Joe Biden had also made a statement in this regard. ‘Production was cut during the Coronavirus period. However, now that the global economy is recovering, it is important to reverse the cuts to make fuel available to consumers at a lower cost,’ said President Biden. Rising fuel prices in the United States have been the reason for Biden’s remarks.

In the US, fuel prices have reached $3.18 per gallon (3.178 litres). Fuel prices have risen by more than a dollar during the year. For the first time since 2014, the average has crossed $3 per gallon. The rise in fuel prices has been attributed to decisions made by President Biden since he came to power. Biden has cancelled the ambitious fuel pipeline project between the United States and Canada. At the same time, no new licenses have been issued to fuel producers this year. As a result, fuel production has been affected, and rates have started rising.

Although the United States has instructed OPEC to increase fuel production, OPEC sources have indicated that member countries are not able to increase production. OPEC has already set production and export quotas for September. The next decision is likely to be taken at a meeting in September, sources said. At the same time, in its monthly report, OPEC claims that there is no need to increase production by claiming that fuel demand will remain stable in the future. The next decision will be made after assessing the situation related to the Coronavirus pandemic, the report said. The report also noted that US shale oil production is likely to increase in the near future.

Following OPEC, the International Energy Agency (IEA) has issued a warning over fuel demand in its new report. Citing the growing incidence of the Delta variant of Coronavirus, the IEA warned that order had begun to decline sharply since July. The same trend is expected to continue till the end of 2021, with additional fuel available in the market in 2022. Against the backdrop of this report, it has come to light that fuel prices have started falling again in the international market.