The Organization of Petroleum Export Countries (OPEC) met in Vienna, Austria and agreed to CUT oil production by two million barrels per day, despite strong input from the United States seeking an increase in output.
A group of some of the world’s most powerful oil producers on Wednesday agreed to impose deep output cuts, seeking to spur a recovery in crude prices despite calls from the U.S. to pump more to help the global economy.
OPEC and non-OPEC allies, a group often referred to as OPEC+, decided at their first face-to-face gathering in Vienna since 2020 to reduce production by 2 million barrels per day from November.
Energy market participants had expected OPEC+, which includes Saudi Arabia and Russia, to impose output cuts of somewhere between 500,000 barrels and 2 million barrels.
The move represents a major reversal in production policy for the alliance, which slashed output by a record 10 million barrels per day in early 2020 when demand plummeted due to the Covid-19 pandemic. The oil cartel has since gradually unwound those record cuts, albeit with several OPEC+ countries struggling to fulfill their quotas.
Oil prices have fallen to roughly $80 a barrel from more than $120 in early June amid growing fears about the prospect of a global economic recession.
The production cut for November is an attempt to reverse this slide, despite repeated pressure from U.S. President Joe Biden’s administration for the group to pump more to lower fuel prices ahead of midterm elections next month.
The White House said on Wednesday that 'it's clear' the OPEC+ oil alliance 'is aligning with Russia' after it announced a massive production cut of two million barrels.
It stands to be a big boost for Moscow, despite the West's efforts to choke off oil and gas revenues as a source of cashflow to fund Russia's illegal invasion of Ukraine.
Meanwhile American drivers could face another increase in gas prices in what could end up being a massive setback for the Biden administration.