Cartel cuts oil supply | International

DAVID McHUGH Associated Press

FRANKFURT, Germany — OPEC and allied oil-producing nations, including Russia, cut supplies to the global economy slightly on Monday, underscoring their displeasure as recession fears help drive down crude prices — as well than the cost of gasoline.

The October decision reverses a largely symbolic increase of 100,000 barrels per day in September. This follows a statement last month by Saudi Arabia’s energy minister that the OPEC+ coalition could cut output at any time.

Oil producers such as Saudi Arabia have resisted US President Joe Biden’s calls to pump more oil to lower gasoline prices and burden consumers. OPEC+ stuck to cautious increases to offset deep cuts made during the COVID-19 pandemic, which were finally reinstated in August.

Since then, growing worries about collapsing future demand have helped push oil prices down from June highs of over $120 a barrel, reducing the windfall for OPEC+ coffers. , but proving a blessing for drivers in the United States as prices at the pumps have fallen.

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The supply cut for October is a small fraction of the 43.8 million barrels per day under OPEC+ production targets, but defied forecasts by several analysts that production would not change. not. Oil prices jumped after the announcement.

U.S. crude rose 3.3% to $89.79 a barrel, while international benchmark Brent rose 3.7% to $96.50 after the decision.

The amount of oil per day “may seem negligible, but the message from today’s cut is clear: OPEC+ thinks it’s down enough,” tweeted University energy policy expert Jason Bordoff. of Columbia.

Oil prices have swirled in recent months: recession fears have pushed them lower, while fears of Russian oil loss due to sanctions over its invasion of Ukraine have pushed them higher .

Recently, recession fears have taken over. European economists are eyeing a recession at the end of this year due to soaring inflation fueled by energy costs, while China’s tough restrictions aimed at halting the spread of the coronavirus have undermined the growth of this great world economy.

This drop in oil prices has been a boon for U.S. drivers, pushing gasoline prices down to $3.82 a gallon from record highs of over $5 in June and providing a potential boost to Biden as his Democratic party heads into the midterm elections.

“The President has been clear that energy supply must meet demand to support economic growth and lower prices for American consumers and consumers around the world,” said Karine Jean-Pierre, attaché White House press release. “President Biden is committed to continuing to take all necessary steps to strengthen energy supply and drive down energy prices.”

In June, fears that US and EU sanctions would pull Russian oil off the market helped push Brent above $123. Prices have fallen sharply in recent weeks as it became clear that Russia was still selling significant amounts of oil to Asia, albeit at heavily discounted prices.

But concerns over the loss of Russian supplies are still present as European sanctions aimed at blocking most Russian oil imports will not come into effect until the end of the year.

Other factors are on the prowl that could influence the price of oil. On the one hand, the wealthy Group of Seven democracies plan to impose a price cap on Russian oil aimed at tackling high energy prices and reducing oil profits that Russia can use for its war in Ukraine.

That’s if the plug works as expected. Russia could refuse to supply oil to countries and companies meeting the cap, which would take barrels off the market. The ceiling price has not been fixed and its influence on the world price remains uncertain.

Meanwhile, an agreement between Western countries and Iran to limit Tehran’s nuclear program could ease sanctions and see more than a million barrels a day of Iranian oil return to the market in the coming months. However, tensions between the United States and Iran seem to have increased in recent days: Iran seized two American naval drones in the Red Sea, and American, Kuwaiti and Saudi warplanes flew over the Middle East on Sunday. in a show of force.

Energy ministers from OPEC+ countries said their September increase of 100,000 barrels per day was only for that month and the group could meet again at any time to discuss developments in the market.

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