The Organisation of the Petroleum Exporting Countries, Russia and the Organisation of the Petroleum Exporting Countries, have agreed to produce two million fewer barrels of crude oil per day, which is equivalent to 2% of the global supply.
This is an attempt to raise prices in countries that feel the heat from rising energy costs.
The group was led by Russia and Saudi Arabia, which represents the largest decline in output since the beginning of the pandemic. This is when oil prices plummeted and demand collapsed.
Oil prices have risen 5% in the past week following Friday’s announcement. After the announcement of the production cut, Brent crude oil rose to $91.95 (PS81.69).
Due to fears of a global recession, prices had fallen to $90 per barrel (PS79.93) from their highs of $120/PS107 three months ago.
Officials from the Joe Biden Whitehouse were lobbying Opec members for production cuts that would increase oil prices during the American midterm elections.
The US has two fingers: Slashing oil production
The Biden administration has demanded that production be maintained at an elevated level since Russia invaded Ukraine. This will increase energy security and lower price pressure.
Angrily, the White House reacted angrily to the decision by calling it “shortsighted” and “mistake”. Karine Jean-Pierre, White House press secretary, said it was clear that Opec had made a decision to stand against the US.
She stated that “It is clear that OPEC+ aligns with Russia with today’s announcement.”
Before it was used, this description was rebuked.
Before the Opec meeting, Suhail al-Mazroui, United Arab Emirates Energy Minister, stated that “the decision is technical and not political.”
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He stated that “we will not use them as a political organization”, and added that global recession concerns would be one of their key topics.
France already has oil supply problems but is not experiencing a shortage. To address supply problems at certain petrol stations, the country used its strategic reserves and granted priority access to healthcare workers.
On Wednesday, Iraq’s oil minister stated that the Opec output cuts will not affect his country’s oil exports.