OPEC+ to cut oil production by 2 million barrels per day to shore up prices, defying U.S. pressure
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- 06 Oct 2022
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A group of some of the world’s most powerful oil producers on Wednesday agreed to impose deep output cuts, seeking to spur a recovery in crude prices despite calls from the U.S. to pump more to help the global economy.
OPEC and non-OPEC allies, a group often referred to as OPEC+, decided at their first face-to-face gathering in Vienna since 2020 to reduce production by 2 million barrels per day from November.
Energy market participants had expected OPEC+, which includes Saudi Arabia and Russia, to impose output cuts of somewhere between 500,000 barrels and 2 million barrels.
The move represents a major reversal in production policy for the alliance, which slashed output by a record 10 million barrels per day in early 2020 when demand plummeted due to the Covid-19 pandemic. The oil cartel has since gradually unwound those record cuts, albeit with several OPEC+ countries struggling to fulfill their quotas.
Oil prices have fallen to roughly $80 a barrel from more than $120 in early June amid growing fears about the prospect of a global economic recession.
The production cut for November is an attempt to reverse this slide, despite repeated pressure from U.S. President Joe Biden’s administration for the group to pump more to lower fuel prices ahead of midterm elections next month.
International benchmark Brent crude futures traded at $92.82 a barrel during Wednesday afternoon deals in London, up around 1.1%. U.S. West Texas Intermediate futures, meanwhile, stood at $87.37, almost 1% higher.
OPEC+ will hold its next meeting on Dec. 4.
White House ‘disappointed’
The White House said in a statement that Biden was “disappointed by the shortsighted decision by OPEC+ to cut production quotas while the global economy is dealing with the continued negative impact of Putin’s invasion of Ukraine.”
It said that Biden had directed the Department of Energy to release another 10 million barrels from the Strategic Petroleum Reserve next month. Read More…
