Oil producer company OPEC+ shocked the energy markets with a production cut
September 7, 2022: -On Monday, some of the most significant oil producers agreed on a small output cut for the following month, surprising energy markets during turmoil.OPEC and non-OPEC partners, an energy alliance called OPEC+, decided to cut production targets by about 100,000 barrels per day from October.
Energy analysts have expected the group to stay with its production policy.
OPEC+ agrees to raise oil output by just 100,000 barrels per day in the previous month. The little boost was widely interpreted as a rebuff to U.S. President Joe Biden after visiting the Kingdom of Saudi Arabia to ask the OPEC kingpin to pump more to cool prices, including the historic release of oil from the U.S. and global strategic reserves and working with workers on a price cap on Russian oil to making sure we maintain a global supply of oil, punishing Putin for his action,” said White House Press Secretary Karine Jean-Pierre.
OPEC+ said in a statement that the decision to revert to August production levels was because the upward adjustment was “intended only for September.”
The next OPEC+ meeting is scheduled for October 5.
On Monday, oil prices traded higher but were off the day’s highs. International benchmark Brent crude futures were up 2.5% at $95.54 a barrel at almost 1 p.m. ET, while U.S. West Texas Intermediate futures were nearly 2.6% at $89.16 a barrel.
Oil prices have decreased by 25% since early June after touching multiyear highs in March. The refusal has been fueled by increasing concerns that interest rate hikes and Covid-related restrictions in parts of China slow global economic growth and curtail oil demand.
Monday’s announcement from OPEC+ comes between a bitter and escalating energy dispute between Russia and the West, with many in Europe deeply concerned regarding the prospect of recession and a winter gas shortage.
Meanwhile, market participants closely monitor the prospect of a supply boost from Iranian crude if Tehran secures a renewed version of the 2015 nuclear deal.
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