The OPEC+ alliance, led by Saudi Arabia and Russiadecided this Wednesday in Vienna, Austria, to reduce its pumping by 2 million barrels of Petroleum newspapers (mbd), international media report.
This represents the largest cut in oil supply since May 2020, in the midst of the current global energy crisis exacerbated by the war in ukraine.
The decision was adopted at a ministerial conference of the Organization of Petroleum Exporting Countries (OPEC) and its ten allied producing nations – including Russia, Mexico and Kazakhstan – which was the group’s first face-to-face meeting since the start of the COVID-19 pandemic. coronavirus, reviews the agency EFE.
In addition, the participating ministers agreed to extend their cooperation for another year, with which the aforementioned alliance, forged in 2016 to face the drop in “petroprices” caused by the shale oil boom in the United States, will remain at least until the end of 2023.
In their final statement, quoted by the Spanish media, they specify that they have agreed to “adjust global production downwards by 2 mbd (…) starting in November.”
#LAST MINUTE | The OPEC + alliance, led by Saudi Arabia and Russia, has decided this Wednesday in Vienna to reduce its output by 2 million barrels per day (mbd), which represents the largest cut in oil supply since May 2020. pic.twitter.com/DJ4G2Wrf8Y
— EFE News (@EFEnoticias) October 5, 2022
According to EFE The cut volume is nominally equivalent to 2% of the world supply of crude oil and is close to double what was expected in the international markets until yesterday, Tuesday, but in physical reality it will be predictably less, although equally important.
The reason is that most producers are already pumping less than the established national quota due to technical capacity problems stemming from insufficient investment, the news release explains.
Thus, it is estimated that as a whole, the alliance pumps between 3.5 and 4 mbd below the total quota established for October, of 43.85 million barrels per day (mbd), which includes the pumping of 20 countries. This includes all the members of the alliance except Venezuela, Iran and Libya, which are exempt from the commitment to limit their extractions.
“We will not be able to cut 2 mbd, but we will strive in that direction,” admitted OPEC’s current president, Bruno Jean-Richard Itoua, in statements quoted by EFE, in which, after highlighting that an attempt has been made to adjust quotas to the capacity of each country, estimated that the real cut will be “something between one and two million” barrels per day.
Deaf ears to the West
Even if the real cut is ultimately going to be less than the one announced, the measure represents a clear “no” to the Western nations that have been asking OPEC for a long time to open the taps to lower fuel and energy prices, and stop thus inflation, in the midst of the current energy crisis.
Through a statement from his National Security Adviser, Jake Sullivan, and his economic adviser Brian Deese, the President of the United States, Joe Biden, today described OPEC+’s decision as “short-term” when “the global economy continues to face the continued negative impact’ of the Russian invasion of Ukraine.
?????? It should be remembered that all this occurs in a context shaken by the war in Ukraine and with a possible global economic recession at the gates. The US had so far tried to keep oil prices low in the market to hit the Russian economy. pic.twitter.com/Mp8oeZN5NA
— Deciphering the War (@descifraguerra) October 5, 2022
Meanwhile, at a press conference in Vienna, the Saudi Minister of Energy, Abdelaziz bin Salmán, refused to answer a question from EFE on OPEC+’s position towards that US reaction.
However, according to the Spanish agency, all the ministers present agreed to reiterate that the group only has technical considerations, and not political ones, when making its decisions, and defended the cut with the argument that they want to attract investment to the sector.
“We are not endangering the energy market. We are providing security and stability to the energy market,” said the secretary general of the Organization of Petroleum Exporting Countries (OPEC), Haitham Al Ghais.
“What we are doing is ensuring that there is more oil on the market in the years to come, it is not a short-term issue,” the Emirati minister, Suhail al Mazrouei, was quoted as saying.
His Saudi colleague admitted “frustration” among producers over the uncertainties created by policies outside their control, and hinted that one of them is the possible cap on the price of Russian oil proposed by the G7.
“We do not know what will happen with the embargo (from the European Union to Russian oil)”, nor with the decisions of the central banks (to raise interest rates), nor “with the confinements in China”, he said when qualifying of “extremely complex” the current situation, refers EFE.
Already the expectation of OPEC + production cuts drove a sharp increase in the price of “black gold” in recent days and today prices continued their upward path after learning of the decision adopted in Vienna, reports the agency.
In the London market, Brent oil finished at $93.48 per barrel, up 1.83% from yesterday’s close and 6.29% from Monday. Analysts expect the price of Brent to exceed $100/barrel again in the coming months, adds the office, according to which OPEC+ will meet again on December 4.
EFE / OnCuba
