OPEC+ agreed to its biggest oil production cuts since the coronavirus pandemic, limiting supply in an already tight market despite pressure from the United States and others to pump more.
In a statement after a meeting in Vienna on Wednesday, the global cartel of oil-producing nations said it would produce 2 million fewer barrels per day.
The move could spur a recovery in oil prices, which fell to around $90 from $120 three months ago on fears of a global economic recession, higher US interest rates and rising US interest rates. a stronger dollar.
Al Jazeera’s Dominic Kane, reporting from Berlin, said the effect of the decision was expected to take three weeks to be reflected in consumer prices.
He also said that “some analysts are suggesting that the United States may be looking to release some of the oil inventories it holds to try to counter what OPEC+ is trying to do.”
The United States had pushed OPEC not to make the cuts, arguing that the fundamentals did not support them, a source familiar with the matter told Reuters news agency.
The United States “disappointed”
Later Wednesday, the White House said it was “disappointed” with OPEC+’s decision and called it “shortsighted.”
“At a time when maintaining a global energy supply is of paramount importance, this decision will have the most negative impact on low- and middle-income countries that are already reeling from high oil prices. energy,” he said in a statement attributed to the United States. National Security Advisor Jake Sullivan and National Economic Council (NEC) Director Brian Deese.
Sources said it was unclear if the cuts could include additional voluntary cuts by members such as Saudi Arabia, or if they could include the band’s existing underproduction.
Shortly after OPEC’s announcement, US Secretary of State Antony Blinken said his country’s government was working ‘to make sure energy is on the market and prices are kept low’. .
Asked at a press conference in Chile whether he was disappointed with U.S. ally Saudi Arabia for accepting the cuts, Blinken said Washington has “a multiplicity of interests with respect to Saudi Arabia”.
OPEC+ fell about 3.6 million barrels per day below its production target in August.
“Rising oil prices, if driven by significant production cuts, would likely irritate the Biden administration ahead of the U.S. midterm elections,” analysts at Citi, the world’s largest bank, said in a note. .
In their statement, the Biden administration’s Sullivan and Deese said the US Department of Energy would release 10 million barrels from the country’s Strategic Petroleum Reserve next month to “protect American consumers and promote energy security.” .
Saudi Arabia and other members of OPEC+, which groups the Organization of the Petroleum Exporting Countries and other producers, including Russia, said they were looking to prevent volatility rather than target a particular oil price.
Benchmark Brent crude hit $93 a barrel on Wednesday, after climbing higher on Tuesday.
The West has accused Russia of weaponizing energy, creating a crisis in Europe that could trigger gas and electricity rationing this winter.
Moscow accuses the West of weaponizing the dollar and financial systems, such as SWIFT, in retaliation for the invasion of Ukraine in February.
Part of the reason Washington wants to lower oil prices is to deprive Moscow of oil revenue, while Saudi Arabia has not condemned Moscow’s actions.
Relations have been strained between the kingdom and the administration of President Joe Biden, who visited Riyadh this year but failed to secure firm co-operation commitments on energy.
“The decision is technical, not political,” UAE Energy Minister Suhail al-Mazroui told reporters ahead of the meeting.
“We won’t use it as a political organization,” he said, adding that concerns about a global recession would be one of the key topics.
Russian Deputy Prime Minister Alexander Novak, who was placed on the US Special Sanctions List for Designated Nationals last week, also traveled to Vienna for meetings. Novak is not under European sanctions.