Opec+ agrees to cut output by two million barrels a day

Published October 6, 2022
Representatives of OPEC member countries attend a press conference after the 45th Joint Ministerial Monitoring Committee and the 33rd OPEC and non-OPEC Ministerial Meeting in Vienna, Austria, on October 5, 2022. — AFP
Representatives of OPEC member countries attend a press conference after the 45th Joint Ministerial Monitoring Committee and the 33rd OPEC and non-OPEC Ministerial Meeting in Vienna, Austria, on October 5, 2022. — AFP

VIENNA: Opec and its Russia-led allies agreed on a major cut in oil production on Wednesday, a move to prop up prices that could bolster sanction-hit Moscow’s coffers and irk Washington.

The 13-nation Opec cartel and its 10 Russian-led allies agreed to reduce two million barrels per day from November at a meeting in Vienna, said Iran’s Opec Governor Amir Hossein Zamaninia.

It is the biggest cut since the height of the Covid pandemic in 2020. Such a move could turbocharge crude prices, further aggravating inflation which has reached decades-high levels in many countries and is contributing to a global economic slowdown.

It could also give Russia a boost ahead of a European Union ban on most of its crude exports later this year and a bid by the Group of Seven wealthy democracies to cap the country’s oil prices.

Move set to bolster Moscow’s coffers, irk Washington

US President Joe Biden personally appealed to Saudi leaders in July to boost production in order to tame prices which soared following Russia’s invasion of Ukraine earlier this year. But crude price have fallen in recent months on concerns over dwindling demand and fears over a possible global recession.

“With consumers only just breathing a sigh of relief after being forced to pay record prices at the pump, today’s cut is not going to go down well,” said Craig Erlam, an analyst at trading platform OANDA, ahead of the meeting.

When asked how the United States would react to a cut, the energy minister of the United Arab Emirates, Suhail al-Mazrouei, insisted that Opec was merely a “technical organisation”.

Alexander Novak, the Russian deputy prime minister in charge of energy who is un­der US sanctions, remained mum as he arrived for the group’s first in-person meeting at its Vienna headquarters since March 2020.

Geopolitical tensions

Collectively known as Opec+, the alliance drastically slashed output by almost 10 million barrels per day (bpd) in April 2020 to reverse a massive drop in crude prices caused by Covid lockdowns.

Opec+ began to raise production last year after the market improved. Output returned to pre-pandemic levels this year, but only on paper as some members have struggled to meet their quotas.

The group agreed last month on a small, symbolic cut of 100,000bpd from October, the first in more than a year.

Published in Dawn, October 6th, 2022

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

A year later
Updated 08 Feb, 2025

A year later

A war of egos has been fought between a handful of individuals at the cost of the well-being of millions of ordinary Pakistanis.
Wheat decision
08 Feb, 2025

Wheat decision

THE federal decision to stop setting the minimum support price for wheat and cease the staple’s procurement...
Dhanmondi attack
08 Feb, 2025

Dhanmondi attack

HISTORY has shown that unless states deliver development and equal rights to all, disenfranchised people can target...
Depopulating Gaza
Updated 07 Feb, 2025

Depopulating Gaza

The least feasible "solution" is the Trumpian plan for Gaza’s ethnic cleansing and occupation, which is a non-starter.
‘Pause’ in US aid
07 Feb, 2025

‘Pause’ in US aid

THE impact of the Trump administration’s decision to ‘pause’ all US foreign aid programmes, especially those...
Mobilising opposition
07 Feb, 2025

Mobilising opposition

POLITICS makes strange bedfellows. There has not, for quite some time, been a guest list as intriguing as the one...