The price of gas at pumps for drivers worldwide might soon go up once again after OPEC+ countries at a meeting in Vienna agreed on to deepest production cut since the Covid-19 pandemic.
The new reduction could drive prices back up after a fall to US$90 from US$120 three months ago on fears of a global economic recession, rising U.S. interest rates, and a stronger dollar. OPEC+ fell about 3.6 million barrels per day below its production target in August.
Saudi Arabia and other members of OPEC+, which groups the Organization of the Petroleum Exporting Countries and other producers including Russia, have said they are seeking to avoid volatility rather than targeting a particular price. Benchmark Brent crude rose to $93 a barrel on Wednesday, after rising on Tuesday.
The decision is technical, not political, UAE Energy Minister Suhail al-Mazroui told reporters before the meeting.
It was the deepest cut to oil production since the 2020 Covid pandemic on Wednesday, curbing supply in an already tight market.
The US administration of President Joseph Biden has dubbed the decision as shortsighted. Analysts expect the US government to take measures following this announcement.
The West has accused Russia of weaponizing energy, creating a crisis in Europe that could trigger gas and power rationing this northern winter, while Moscow accuses the West of weaponizing the dollar and financial systems such as SWIFT in retaliation for Russia sending troops to Ukraine in February.
It's clear that OPEC is aligning with Russia with today's announcement, spokeswoman Karine Jean-Pierre said. ”The global economy is responding to (Russian President Vladimir) Putin's war and so by making this decision, it is going to have an effect on low- and middle-income countries.
President Biden is disappointed” by this decision after all his maneuvering to bring down US fuel prices and has already ordered the release of 10 million barrels from the Strategic Petroleum Reserve beginning in November. He will reportedly continue to direct releases as appropriate to protect American consumers and promote energy security.
The US fossil fuel industry said Biden now has no choice but to encourage more domestic output after the Democratic government was lambasted for smothering domestic production with overbearing regulations.