The “OPEC Plus” group agreed on the largest production cut since the “Covid-19” pandemic, at a meeting in Vienna today. And the OPEC Plus production cut could lead to a recovery in oil prices, down to about $ 90, from $ 120 three months ago, due to fears of a global economic recession, rising oil rates. US interest and rising dollar.
An informed source said the US is pressuring the Organization of Petroleum Exporting Countries (OPEC) not to proceed with production cuts and says market fundamentals do not support the reduction.
Sources said it is still unclear whether the cuts could include further voluntary cuts by members or whether they could include actual production shortages in producing countries.
The production of OPEC Plus in August was below the target of about 3.6 million barrels per day.
“If oil prices rise due to massive production cuts, it is likely to irritate the administration of US President Joe Biden ahead of the midterm elections in the US,” Citi analysts said in a statement.
“There may be further political reactions from the United States, including further withdrawals of strategic stocks,” they added. JPMorgan also expected Washington to take countermeasures by releasing more shares from stocks.
OPEC Plus members, which includes OPEC countries and non-OPEC producers, including Russia, say they try to prevent fluctuations and not aim for a specific oil price. Brent crude, the global benchmark, rose to $ 93 a barrel today, after yesterday’s high.
Russian Deputy Prime Minister Alexander Novak said it was agreed to extend the “OPEC Plus” agreement until the end of 2023.