OPEC and allied oil-producing countries marginally reduced global oil supplies as prices fall

OPEC and allied oil-producing countries, including Russia, have slightly cut supplies to the global economy

on Monday, underscoring his dissatisfaction as recession fears are helping to lower crude oil prices along with gas costs to the delight of motorists.

The October decision reverses a largely symbolic rise of 100,000 barrels per day in September. Saudi Arabia’s energy minister’s statement last month that the OPEC+ coalition could cut production at any time.

OPEC+ has held onto cautious increases to offset deep cuts taken during the COVID-19 pandemic, which were eventually restored in August.

Since then, growing concerns about falling future demand have helped push oil prices down from highs of more than $120 a barrel, reducing unexpected gains for OPEC+ coffers but proving to be a boon for drivers in the US USA proved. Pump prices have fallen.

October’s supply cut is a small fraction of the 43.8 million barrels per day OPEC+ production targets, but multiple analysts’ predictions that there would be no change in production were wrong. Oil prices rose after the announcement.

Crude oil rose 3.3%. , at $89.79 a barrel, while international benchmark Brent rose 3.7% to $96.50 after the decision.

Oil per day “may seem insignificant, but the message of today’s cut is clear:

OPEC+ thinks it’s low enough,” tweeted Jason Bordoff, an energy policy expert at Columbia University. Oil prices have fluctuated in recent months: fears of a recession have pushed them lower, while concerns about a loss of Russian oil due to sanctions over the invasion of Ukraine have pushed them higher.

Recession fears have taken over recently. Economists in Europe are expecting a recession later this year on rising inflation fueled by energy costs, while China’s tight restrictions to stem the spread of the coronavirus have eroded growth in this major global economy.

Falling oil prices have been a boon to American motorists, taking gasoline prices down to $3.82 a gallon from record highs of more than $5 in June and offering a potential boost for Biden as his Democratic Party heads into midterm elections.

In June, fears that US and European sanctions would pull Russian oil off the market helped push Brent above $123. Asia, but at greatly reduced prices. However, concerns over the loss of Russian supplies remain as European sanctions aimed at blocking most Russian oil imports will not come into effect until the end of the year.

There are other factors lurking that could affect oil prices.

On the one hand, the Group of the Seven Wealthy Democracies plan to cap Russian oil prices to combat high energy prices and reduce oil profits that Russia can use in its war. in Ukraine. That is if the cap works as intended. Russia could refuse to supply oil to countries and companies that comply with the cap and withdraw barrels from the market. The upper price limit has not been set and its influence on the world market price remains unclear in.

Meanwhile, a deal between western countries and Iran to limit Tehran’s nuclear program could ease sanctions and put more than 1 million barrels a day of Iranian oil back on the market in the coming months.

However, tensions are emerging between the US and Iran. has increased in recent days: Iran captured two US naval drones in the Red Sea, and US, Kuwaiti and Saudi warplanes flew over the Middle East in a show of force on Sunday. Opec+ energy ministers said on Monday that their increase of 100,000 barrels a day in September is for that month only and that the group could meet again at any time to discuss market developments.

The group said its chairman could call an extraordinary meeting at any time before the next meeting, which is scheduled for Monday in October, underscoring its dissatisfaction as recession fears are helping to push up crude prices along with oil and petrol costs to the delight of drivers reduce. per day in September. It follows a statement by Saudi Arabia’s energy minister last month that the OPEC+ coalition could cut production at any time.

Oil producers like Saudi Arabia have defied US President Joe Biden’s calls to pump more oil in a bid to lower gas prices and consumer strain.OPEC+ made only cautious increases to offset sharp cuts made during the COVID-19 pandemic, which were eventually reinstated in August.

Since then, growing concerns about falling future demand have helped push oil prices down from June highs of more than $120 a barrel, cutting unexpected gains for OPEC+ countries’ coffers after the October supply cut accounts for a small fraction of the 43.8 million barrels per day OPEC+ production targets call for, but they were wrong in several analysts’ predictions that there would be no changes in production.

Oil prices soared following the announcement

Crude oil rose 3.3% to $89.79 a barrel, while international benchmark Brent rose 3.7% to $96.50 following the decision. The amount of oil per day “may seem insignificant, but the message of today’s cut is clear: OPEC+ believes it has fallen enough,” tweeted Jason Bordoff, an energy policy expert at Columbia University.

Oil prices have fluctuated in recent months: fears of a recession have pushed them lower, while concerns about a loss of Russian oil due to sanctions over the invasion of Ukraine have pushed them higher. Recession fears have taken over recently. Economists in Europe are expecting a recession later this year on rising inflation fueled by energy costs, while China’s tight restrictions to stem the spread of the coronavirus have eroded growth in this major global economy.

Falling oil prices have been a boon to American motorists, taking gasoline prices down to $3.82 a gallon from record highs of more than $5 in June and offering a potential boost for Biden as his Democratic Party heads into midterm elections. In June, fears that US and European sanctions would pull Russian oil off the market helped push Brent above $123. Asia, but at greatly reduced prices.

However, concerns over the loss of Russian supplies remain as European sanctions aimed at blocking most Russian oil imports will not come into effect until the end of the year. There are other factors lurking that could affect oil prices. On the one hand, the Group of the Seven Wealthy Democracies plan to cap Russian oil prices to combat high energy prices and reduce oil profits that Russia can use in its war in Ukraine.

That is if the cap works as intended. Russia could refuse to supply oil to countries and companies that comply with the cap and withdraw barrels from the market. The upper price limit has not been set and its influence on the world market price remains unclear in. Meanwhile, a deal between western countries and Iran to limit Tehran’s nuclear program could ease sanctions and put more than 1 million barrels a day of Iranian oil back on the market in the coming months.

However, tensions are emerging between the US and Iran. has increased in recent days: Iran captured two US naval drones in the Red Sea, and US, Kuwaiti and Saudi warplanes flew over the Middle East in a show of force on Sunday. Opec+ energy ministers said on Monday that their increase of 100,000 barrels a day in September is for that month only and that the group could meet again at any time to discuss market developments.

The group said its chair could call a special meeting anytime before the next scheduled meeting in October.

 

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