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OPEC+ OPEC has decided to cut production sharply to support the fall in oil prices.
A meeting of energy ministers at the Vienna headquarters of the OPEC oil cartel slashed output by more than an expected 2 million bpd starting in November, after holding its first face-to-face meeting since the start of the Covid-19 pandemic.
The group said the decision was based on “uncertainty surrounding the outlook for the global economy and oil markets.”
The 45th meeting of the Joint Ministerial Oversight Committee and the 33rd OPEC and non-OPEC ministerial meeting took place in person at the OPEC Secretariat in Vienna, Austria, on Wednesday, October 5, 2022.
Read the press release? https://t.co/Bu3HMDi3In
– OPEC (@OPECSecretariat) October 5, 2022
Saudi Energy Minister Abdulaziz bin Salman highlighted the cartel’s established role as guardians of stable energy markets.
“We are here as a moderating force, bringing stability,” he told reporters.
In addition to last month’s symbolic cut, the slashing in the amount of crude OPEC+ ships to the world is a sudden shift from the resumption of deep cuts in months during the worst of the pandemic in 2020.
Global energy prices have fluctuated wildly since Russia’s invasion of Ukraine as demand rebounded, fueling inflation that is squeezing global economies.
The decision comes amid fears that major global economies such as the U.S. or Europe will slide into recession due to high inflation, rising interest rates aimed at curbing rising consumer prices and uncertainty over Russia’s war in Ukraine below the summer peak.
“We are going through a period of uncertainty of all kinds, and this could happen to us, and it’s a dark cloud that’s brewing,” Mr bin Salman said, adding that OPEC+ seeks to maintain “a leading edge. “.
Oil prices surged this summer on concerns that Russian supplies were lost due to sanctions imposed by the war in Ukraine, but fell as concerns over a recession in major economies and China’s Covid-19 restrictions weighed on crude demand.
Brent crude, the international benchmark, has slumped above $100 a barrel for much of the summer and has fallen to $84 in recent days.
At its last meeting in September, OPEC+ cut the amount of oil it produces by 100,000 barrels per day in October. The token production cut didn’t do much to push oil prices lower, but it got the market on notice that the group was willing to act if prices continued to fall.
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