Saudi Arabia yesterday rejected a plea by US President Joe Biden for a major increase in oil production.
It has been announced that OPEC+ is to raise its output goal next month by just 100,000 barrels per day (bpd) - the equivalent of only 0.1% of global demand.
The decision at yesterday's meeting in Vienna comes after Mr Biden travelled to Saudi Arabia in July to meet with Crown Prince Mohammed bin Salman and request him to pump more oil in a bid to bring down the high price of crude.
Analysts said the tiny increase in OPEC+ output was a setback to the President.
Raad Alkadiri, managing director for energy, climate and sustainability at Eurasia Group, told Reuters: "That is so little as to be meaningless. From a physical standpoint, it is a marginal blip. As a political gesture, it is almost insulting."
Paul Horsnell, head of commodities research at Standard Chartered, added: "A bit mystified as to the point of doing 100,000 barrels a day rather than zero - for practical and measurement purposes it is zero."
Saudi Arabia is keen to bolster relations with the US, but also needs to maintain its ties to Russia, whose exports are being restricted by sanctions following its invasion of Ukraine.
Slump in demand
The Telegraph says the 23-member Opec+ group cut production in 2020 after a slump in demand due to pandemic lockdowns triggered a price crash.
It has since gradually unwound all the production cuts, although some countries have not managed to meet their commitments.
Many remain cautious about further increases in production due to fears that possible recession could curb demand again.
In its monthly oil outlook report in July, the International Energy Agency (IEA) said the outlook for the oil market had "rarely been more uncertain".
It added: "A worsening macroeconomic outlook and fears of recession are weighing on market sentiment, while there are ongoing risks on the supply side."
As of June, global oil production was 99.5 million barrels per day, an increase of 690,000 barrels per day compared to the previous month
Combined with disruption following Russia's invasion of Ukraine, the lack of spare supply has driven up energy markets and spurred inflation.
Limited spare capacity
OPEC+, which will next meet on September 5, said in a statement yesterday that limited spare capacity requires it to be used with great caution in response to severe supply disruptions.
It also said a chronic lack of investment in the oil sector would impact adequate supply to meet growing demand beyond 2023.
Brent crude futures were marginally high this morning - up 0.08% at $96.86 a barrel.
FTSE 100
The UK's top share index, the FTSE 100, was down five points at 7,440 shortly after opening, following yesterday's 36-point gain.
Companies reporting today
- First-quarter results: Alibaba
- Half-year results: Glencore, Meggitt, Morgan Sindall, Next, Rolls-Royce, Serco
- Full-year results: Pantheon International