OPEC+ Cutting Oil Production by 2M Barrels Per Day
On Wednesday, OPEC+, the group of major oil producers that includes Saudi Arabia and Russia, announced after its first in-person meeting since March 2020 that it will cut oil production by 2M barrels per day starting in November. OPEC and its partners control more than 40% of the world’s oil pr...
Facts
- On Wednesday, OPEC+, the group of major oil producers that includes Saudi Arabia and Russia, announced after its first in-person meeting since March 2020 that it will cut oil production by 2M barrels per day starting in November. OPEC and its partners control more than 40% of the world’s oil production, and this reduction is the equivalent of about 2% of global oil demand.1
- While announcing its cuts, OPEC+ said the move was in response to “the uncertainty that surrounds the global economic and oil market outlooks.” The price of Brent crude went up 1.5% to $93 after the news.1
- US National Security Advisor Jake Sullivan and National Economic Council Director Brian Deese expressed their disappointment about OPEC+’s decision, calling it “shortsighted.”2
- OPEC+’s decision could potentially hurt US consumers if gas prices, which are now approximately $3.80 per gallon, skyrocket in response. This could politically impact the White House ahead of November's midterm elections.3
- Geopolitically, an increase in oil prices could potentially help Russia finance its war with Ukraine. Russia is dealing with international sanctions, and on Wednesday, the EU announced a price cap on Russia’s oil sales.4
- President Biden responded to the OPEC+ announcement by suggesting that the group are aligning with Russia. He also announced an increase in output from the US Strategic Petroleum Reserve by 10M barrels next month.5
Sources: 1CNN, 2Axios, 3FOX News, 4CNBC and 5New York Post.
Narratives
- Republican narrative, as provided by FOX News. Pres. Biden has given Americans yet another reason to vote Democrats out in this fall’s elections, and make sure they get nowhere near the White House in 2024. Instead of ramping up domestic oil and gas production, Biden remains beholden to climate zealots that think we can survive on renewable energy. This has the making of a looming energy mess.
- Democratic narrative, as provided by New York Times. There’s no reason to panic. The slowing demand from the EU and China, which OPEC+ fears, might counter the cutbacks. OPEC+ also faces stiff competition from increased production from the US, Guyana, and Brazil. OPEC+ countries might find that their decision won’t have the desired result, and Biden's energy policies are on track.
