OPEC and Russia implement drastic cuts in oil production to keep prices in check

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Specifically, the OPEC+ group will cut its daily production by 2 million barrels, double what experts predicted. Joe Biden has expressed disappointment at the decision, considering it a “short-term” measure.

Euskaraz irakurri: OPEC taldeak eta Errusiak nabarmen murriztu dute petrolio ekoizpena, prezieei eusteko

the alliance OPEC+directed by Saudi Arabia and Russiadecided this Wednesday in Vienna reduce pumping by 2 million barrels per day (mbd), meaning the biggest oil supply cut since May 2020.

This was announced to the press by Iran’s Deputy Oil Minister, Amir Hossein Zamaninia, at the conclusion of a ministerial conference of the Organization of the Petroleum Exporting Countries (OPEC) and its ten allied producing countries, including Russia, Mexico and Kazakhstan.

In addition, the participating ministers have agreed to extend their cooperation for another year, with which the aforementioned alliance, forged in 2016 to absorb the fall in “oil prices” caused by the US shale boom, will remain at least until end of 2023.

In their final statement, the ministers explain that they have agreed to “cut down world production by 2 million barrels per day from November 2022”. The production cut agreed today is the most significant since the nearly 10 million barrels per day the group launched in May 2020 to offset the collapse in energy demand caused by the coronavirus crisis.

It is almost double what was expected in international markets until Tuesday, as several delegates had leaked to the press that they were negotiating a cut of just over a million barrels per day, which has already led to a significant price hike. . However, the actual reduction is expected to be smaller than the official one, as the extraction of most of the group’s producers has been well below the established national quota for months, despite pumping at maximum capacity.

A month ago, the alliance set the joint production limit at 43.85 million barrels per day (excluding OPEC members Venezuela, Iran and Libya), but it is estimated that they currently produce between 3.5 and 5 million barrels per day below that level. .

A “No” to the Nations of the West

While the real austerity will be less than the announced one, the measure adopted assumes a clear “no” to Western countries, which OPEC has long been asking to open the taps to make fuel and energy cheaperand thus curb inflation.

Along these lines, the President of the United States, Joe Bidenexpressed disappointment at OPEC+’s decision, considering it a “short-term” measure: “At a time when preserving global energy supplies is paramount, this decision will have the greatest negative impact on low and middle income earners countries, already suffering from high energy prices,” he said in a statement from his national security adviser, Jake Sullivan, and his economic adviser, Brian Deese.

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Source: EITB

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