The OPEC+ alliance of oil-exporting countries decided to sharply cut production to support sagging oil prices, a move that could deal the struggling global economy another blow and raise pump prices worldwide.
FILE - Fuel trucks line up in front of storage tanks at the North Jiddah bulk plant, an Aramco oil facility, in Jiddah, Saudi Arabia. The OPEC+ alliance that includes Saudi Arabia and Russia is planning to cut production by 2 million barrels.
The group said the decision was based on the “uncertainty that surrounds the global economic and oil market outlooks.” Saudi Energy Minister Abdulaziz bin Salman stressed the cartel’s stated role as a guardian of stable energy markets.Besides a token trim last month, the major cut in the amount of crude that OPEC+ ships to the world is an abrupt turnaround from months of restoring deep cuts made during the depths of the pandemic.
Oil is trading well below its summer peaks because of fears that major global economies such as the U.S. or Europe will sink into recession due to high inflation, rising interest rates and uncertainty over the war in Ukraine. “The President is disappointed by the shortsighted decision by OPEC+ to cut production quotas while the global economy is dealing with the continued negative impact of Putin’s invasion of Ukraine,” the White House said in a statement. “At a time when maintaining a global supply of energy is of paramount importance, this decision will have the most negative impact on lower- and middle-income countries that are already reeling from elevated energy prices.
Oil supply could face further cutbacks in coming months when a European ban on most Russian imports takes effect in December. A separate move by the U.S. and other members of the Group of Seven wealthy democracies to impose a price cap on Russian oil could reduce supply if Russia retaliates by refusing to ship to countries and companies that observe the cap.
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