Arab Press

بالشعب و للشعب
Tuesday, Dec 05, 2023

OPEC+ agrees output cut of 2 million barrels per day despite US concerns

OPEC+ agrees output cut of 2 million barrels per day despite US concerns

Oil prices edged up after the Organization of the Petroleum Exporting Countries and its allies, including Russia, agreed an output reduction of 2 million barrels per day from November — its deepest cuts since the 2020 COVID-19 pandemic.

The decision was made during OPEC+'s Joint Ministerial Monitoring Committee in-person meeting in Vienna, and could prompt a recovery in oil prices that have dropped to about $90 from $120 three months ago on fears of a global economic recession, rising US interest rates and a stronger dollar.

Sources told Reuters it was unclear if cuts could include additional voluntary reductions by members such as Saudi Arabia, or if they could include existing under-production by the group.

OPEC+ fell about 3.6 million bpd short of its output target in August.

After the decision was revealed, oil prices rose, with Brent crude up 0.38 percent to $92.15 a barrel at 04.30 p.m Saudi time, while US West Texas Intermediate went up 0.29 percent to $86.77 per barrel.

Following the meeting, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman, said the alliance’s priority was “to maintain a sustainable oil market.”

Wednesday's production cuts of 2 million bpd are based on existing baseline figures, which means the cuts would be less deep because OPEC+ fell about 3.6 million bpd short of its output target in August.
Under-production happened because of Western sanctions on countries such as Russia, Venezuela and Iran and output problems with producers such as Nigeria and Angola.
Prince Abdulaziz said the real cuts would be 1-1.1 million bpd.

Mohammed Al Suwayed, CEO of investment advisory company Razeen Capital, warned the move could fuel the global price increases currently tearing through the world's economy.

Speaking to Arab News, he said: “In my opinion, the production cut means increasing oil prices, hence more revenues to oil producers. But the decision itself doesn’t look like is related to market fundamentals, so we should brace for more interest rate hikes due to an expected additional increase in inflation.”

Hassan Balfakeih, former chief oil demand analyst at OPEC Secretariat, told Arab News that current oil prices are more reflective of “geopolitical developments” than “true market fundamentals.”

He added: “Already elevated inflationary pressures and a fragile economic outlook could dampen oil demand in the coming months.

“To avoid a possible weakening of oil market fundamentals, (a) proactive and solid decision is critical to balance the market over the short-term.”

OPEC+ also annnounced the frequency of the Joint Ministerial Monitoring Committee meetings will be changed to every two months.

US response


The cuts come despite US pressure to pump more, and will curb supply in an already tight market.

The move drew a swift rebuke from US President Joe Biden. “The president is disappointed by the shortsighted decision by OPEC+,” National Security Adviser Jake Sullivan and top economic adviser Brian Deese said in a statement.
The supply cut will hit countries “already reeling” from high prices while “the global economy is dealing with the continued negative impact” of Russia's attack on Ukraine, the statement said.

US Secretary of State Antony Blinken said on Wednesday the White House is working to ensure energy supply is on the market and that prices are low.

Asked at a press conference in Chile if he was disappointed in Saudi Arabia for agreeing to the cuts, Blinken said Washington has a "multiplicity of interests with regard to Saudi Arabia."

"We are working every single day to make sure to the best of our ability that, again, energy supply from wherever is actually meeting demand in order to ensure that energy is on the market and the prices are kept low," Blinken said.

John Kirby, national security council coordinator for strategic communications at the White House, said his country should be less dependent on OPEC+ and foreign producers for oil.

Speaking to Fox News, he sought to play down the decision, saying: “OPEC+ has been saying, telling the world they're actually producing three and a half million more barrels than they actually are. So, in some ways this announced decrease really just kind of gets them back into more aligned with actual production."

His comments were at odds with some analysts, US investment bank Citi warning there could be retaliation.

“There could be further political reactions from the US, including additional releases of strategic stocks, along with some wildcards including further fostering of a NOPEC bill,” Citi said, referring to a US antitrust bill against OPEC.

JPMorgan also said it expected Washington to put in place countermeasures by releasing more oil stocks, while Andy Critchlow, head of news for Europe, the Middle East and Africa at S&P Global Commodity Insights warned that OPEC+ was “playing with fire” in a volatile geopolitical environment.

Decision is “technical, not political”


Saudi Arabia and other members of OPEC+ have previously said they seek to prevent volatility rather than to target a particular oil price when considering production targets.

On his way into the meeting, UAE Energy Minister Suhail Al-Mazroui told reporters that any decision is “technical, not political,” adding: “We will not use it as a political organization.”

The decision from OPEC+ comes at a time when the global oil market, especially European countries, face energy products shortage after they decided to gradually stop their dependence on Russian energy exports in the wake of Vladimir Putin’s invasion of Ukraine

Ahead of the meeting, a report by King Abdullah Petroleum Studies and Research Center suggested effective Western sanctions on Russia could make the global oil market tighter, as picking viable alternatives to replace the country’s energy exports seem difficult.

The report noted that the US and Canada have successfully swapped imports, as these nations were not dependent on Russian imports in the past.

However, European countries face challenges as they depend heavily on Moscow to fulfill their energy needs.

Newsletter

Related Articles

Arab Press
Close
0:00
0:00
The BBC Caught Again with Questionable Journalistic Standards, as Ugly Facts Undermine Its Attractive Yet Flawed Arguments
Biden Advocates for Palestinian Authority to Govern Gaza and West Bank
Apple and Disney Halt Ads on X Following Elon Musk's Antisemitic Post, US Reacts
The UK’s Supreme Court, in a move that surprised no one who respects international law and human rights, has just delivered a landmark ruling against Prime Minister Rishi Sunak’s immigration strategy.
Top German journalist received €600,000 from Putin ally, leak reveals
A Dramatic Video from Gaza, Provided by IDF Spokesperson Daniel Hagari, Offers Undeniable Evidence of Hamas Establishing Terror Operation Bases Near Schools, Above Hospitals, and Inside Civilian Areas.
Moody's Downgrades U.S. Credit Outlook to Negative Amid Fiscal Concerns
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Israel: Unprecedented Civil Disobedience Looms as IDF Reservists Protest Judiciary Reform
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Swedish Embassy in Baghdad Engulfed in Flames Amidst a Firestorm of Protests
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Today, we're unveiling the splendor of one of Saudi Arabia's most exclusive and stunning retreats – the Jeddah Yacht Club
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
Europe is boiling: Extreme Weather Conditions Prevail Across the Continent
Israeli Prime Minister Netanyahu Hospitalized Due to Dehydration Amidst Summer Heatwave
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Saudi Arabia Joins the Treaty of Amity and Cooperation in Southeast Asia
The Renowned Crown Prince Camel Festival Set to Return to Taif on Aug. 1
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.
An Ominous Shift in Warfare: Western Powers Risk War Crimes and Violate International Norms with Cluster Bomb Supply to Ukraine
Bye bye democracy, human rights, freedom: French Cops Can Now Secretly Activate Phone Cameras, Microphones And GPS To Spy On Citizens
The Poor Man With Money, Mark Zuckerberg, Unveils Twitter Replica with Heavy-Handed Censorship: A New Low in Innovation?
Tensions Escalate as Iran Challenges Saudi Arabia's Sovereignty over Al-Durrah Gas Field
The Double-Edged Sword of AI: AI is linked to layoffs in industry that created it
Saudi Arabia and China Forge New Frontiers in Space Exploration
US Sanctions on China's Chip Industry Backfire, Prompting Self-Inflicted Blowback
×