OPEC+ to sharply cut oil production to boost prices
Frankfurt, October 5
The OPEC+ alliance of oil-exporting countries on Wednesday decided to sharply cut production to support sagging oil prices, a move that could deal the struggling global economy another blow and raise politically sensitive pump prices for US drivers just ahead of key national elections.
Energy ministers meeting at the Vienna headquarters of the Organisation of the Petroleum Exporting Countries (OPEC) oil cartel cut production by 2 million barrels per day starting in November.
Besides a token trim in oil production last month, the major cut is an abrupt turnaround from months of restoring deep cuts made during the depths of the pandemic and could help alliance member Russia weather a looming European ban on oil imports.
In a statement, OPEC+ said the decision was based on the “uncertainty that surrounds the global economic and oil market outlooks.” The impact of the production cut on oil prices — and thus the price of gasoline made from crude — will be limited somewhat because OPEC+ members are already unable to meet the quotas set by the group.
The alliance also said it was renewing its cooperation between members of the OPEC cartel and non-members, the most significant of which is Russia. The deal was to expire at year’s end.
The decision comes as oil trades well below its summer peaks because of fears that major global economies such as the US or Europe will sink into recession due to high inflation, rising interest rates meant to curb rising consumer prices, and uncertainty over Russia’s war against in Ukraine.
The fall in oil prices has been a boon to US drivers and for US President Joe Biden as his Democratic Party gears up for congressional elections next month. — AP
Blow to struggling global economy
- The oil cartel will cut production by 2 million barrels per day starting in November
- The decision is an abrupt turnaround from months of restoring deep cuts made during the depths of the Covid pandemic
- The move could help alliance member Russia weather a looming European ban on oil imports
