Increases and cuts

OPEC+ has just announced they will increase oil production by 137,000 barrels per day. In the table below. You can see the expected production increase by country. Interestingly, only 8 members of the 24 that belong to OPEC+, are on that table. More interesting, is the fact that perhaps only 2 of them, UAE and the Saudis can actually increase production, since the other members are already at capacity. Russia, a member of OPEC+ but not of OPEC, will try to increase production as well, which will allow them to gain market share and overcome sanctions while it continues to fight the war in Ukraine. More production means lower prices, unless there is an equivalent increae increase in demand, which is not in the books. That may bring a positive shock (lowering it) to U.S. inflation, where energy is an important component, and a volatile one. It these production increases are finally implemented, the Fed will welcome them, as they will take pressure from CPI and PCE and allow Powell to cut rates.

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