The Organization of Petroleum Exporting Countries, OPEC, has agreed to raise oil production by around 1 million barrels per day from July 2018.
The decision was arrived at after a meeting by representatives of member countries, on Friday [June 22, 2018].
Despite this decision to increase output, some analysts say the impact will be marginal because some countries that recently underproduced oil will struggle to return to full quotas.
Also, others with high production levels will not be allowed to fill the gap.
The agreement comes after a week of tense negotiation at OPEC’s headquarters in Vienna, Austria.
Top OPEC producer, Saudi Arabia faced the challenge of convincing a handful of reluctant producers including Iran, Iraq and Venezuela to support an output hike.
While OPEC avoided the disastrous outcome of ending the week without a deal, it left the oil market somewhat disappointed by declining to announce a hard figure.
“With the looming threat of an Iran walkout, the best you could get was deliberate ambiguity,” said Helima Croft, global head of commodity strategy at RBC Capital Markets.
On Friday, OPEC members agreed to start pumping more oil, though the agreement will not end the group’s 18-month-old deal to limit output. Instead the producers are seeking to cut no deeper than 1.2 million bpd, the target they set in November 2016.
OPEC’s official statement said members agreed to return to 100 percent compliance with the 2016 deal beginning on July 1. The group said compliance reached 152 percent in May 2018, which means OPEC was cutting about 600,000 bpd more than it intended.
It is unclear how the development will affect prices and for Ghana, an eventual reduction will mean that prices of fuel products are likely to be reduced.