Oil producers like Saudi Arabia have defied US President Joe Biden’s calls to pump more oil to lower gasoline prices.
FRANKFURT (ODER), Germany — OPEC and allied oil-producing countries, including Russia, have cut supplies to the global economy by 100,000 barrels a day, underscoring their dissatisfaction with crude oil prices falling on recession fears.
Energy ministers’ decision on Monday means the cut for October reverses the mostly token increase by the same amount in September. The move follows a statement by Saudi Arabia’s energy minister last month that the group could reduce 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.
But worries about a slump in future demand have helped push prices down from June highs of over $120 a barrel, cutting into the boon to OPEC+ countries’ budgets but proving to be a boon to motorists in in the US as pump prices have eased.
Energy ministers said in a statement that the September increase was for this month only and that the group could meet again at any time to discuss market developments.
Other factors are lurking that could affect oil prices. On the one hand, the group of seven major democracies, a Price cap for imports of Russian oil and what impact that might have on the market. The price level for the cap has not yet been determined.
Meanwhile, a deal between Western countries and Iran to limit Tehran’s nuclear program could ease sanctions and result in more than 1 million barrels of Iranian oil returning to the market in the coming months. However, tensions between the US and Iran appear to have increased in recent days: Iran seized two US naval drones in the Red Sea, and on Sunday US, Kuwaiti and Saudi warplanes flew over the Middle East in a show of force.
Recession fears have recently gained the upper hand. Economists in Europe are predicting a recession later this year due to skyrocketing inflation fueled by energy costswhile China’s tight restrictions aimed at halting the spread of the coronavirus have hampered the growth of this major global economy.
This Falling oil prices have been a boon to US driverssending gasoline prices to $3.82 a gallon from record highs of over $5 in June.
This month, fears that US and European sanctions would take Russian oil off the market helped push Brent above $123. These concerns are still there because European sanctions against Russian oil supplies will not come into effect until the end of the year.
https://www.kvue.com/article/news/nation-world/oil-supplies-cut-as-prices-fall/507-21dda36a-84df-4927-86e5-9da2bbb4d26e OPEC+ cuts oil supplies as global gas prices fall