OPEC+ to cut oil production despite Washington's will

OPEC+ member countries discuss a possibility of reducing oil production by more than a million barrels per day. The ministers of the member states will discuss this issue at a meeting in Vienna on 5 October.

A month ago, OPEC+ countries decided to cut oil production in October by 100,000 barrels per day. The document then noted that the August decision to increase production was designed only for September, TASS said.

In addition, OPEC+ ministers agreed to hold alliance meetings at any time to respond to market conditions.

The oil production decline in September looked symbolic. Indeed, OPEC+ includes 23 countries. The reduction (or increase) in oil production is distributed in proportion to the market. Therefore, it is Russia and Saudi Arabia — the oil production leaders — that reduce (or increase) oil production most.

The current agreement to reduce oil production, if implemented, will be much more conspicuous than the previous one. Why is this being done, given that oil prices have been at a fairly high level these days, at around $90 per barrel?

According to experts' estimates, the demand for oil will fall significantly already in the coming months. The oil demand in China and Europe has been pretty low lately. OPEC+ wants to prevent a collapse in oil prices.

If the alliance decides to reduce oil production, OPEC+ will demonstrate its attitude towards Washington's calls not to reduce, but to increase oil production. The US authorities are interested in this, since the shortage of oil triggers a price increase — not only at gas stations.

It is worth noting another factor that directly concerns Russia. The EU currently discusses another package of sanctions against Russia. The new package, among other things, will cap prices on Russian oil.

Washington and G7 countries have been promoting this idea for months already. Today we can see the European Union, which includes 28 states, discussing the idea of ​​capping prices on Russian oil.

Russian officials earlier said that Moscow would not supply fuel to the countries that impose a limit on fuel prices. Consequently, taking into account the reduction in oil production by OPEC+ states, there is every chance for oil prices to set a new record.

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Author`s name Editorial Team
Editor Dmitry Sudakov
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