The alliance of oil producers OPEC +, led by Saudi Arabia and Russia, decided this Wednesday, in Vienna, to reduce its production by two million barrels per day, which represents the largest cut since the pandemic.
The announcement was made by Iran’s Deputy Oil Minister Amir Hossein Zamaninia at the end of a conference of the Organization of the Petroleum Exporting Countries (OPEC) and its 10 allied producing countries, including Russia, Mexico and Kazakhstan.
The cut in production was already expected and is justified by the sharp drop in oil prices. Today’s decision is expected to favor a recovery of the amounts paid to OPEC.
The price of oil fell from around 120 to 90 dollars (from around 12.1 euros to 91.3 euros) three months ago due to fears of a global economic recession, but also due to the rise in interest rates in the United States and the appreciation of the dollar.
The production decision, which will start from November, is greater than May 2020, when the Covid-19 pandemic did not start and was approved by the members of the alliance a little more than a month after the mid-term elections in the U.S.
US President Joe Biden has been fighting for months to try to contain the rise in prices, which is eroding the purchasing power of families, having even gone to Riyadh in July to defend his position.
When asked on his arrival in Vienna for today’s meeting, UAE Energy Minister Souhail ben Mohammed Al-Mazrouei stated that OPEC+ is a “technical organization” that is not governed by political issues.
Created in 1960 with the aim of regulating the production and price of crude oil, through the establishment of quotas, OPEC was extended in 2006 to Russia and other partners to form OPEC+.
In a historic gesture, the members of the alliance decided in the spring of 2020 to cut their production by almost 10 million barrels per day to face the collapse in demand linked to the Covid-19 pandemic.
Already last September, the group had slightly lowered its target (by 100,000 barrels), stating that it was prepared to go further.
After soaring earlier in the week, North Sea Brent traded this morning at US$91.84, while its US counterpart, WTI, stood at US$86.36 a barrel.
Source: TSF
