Oil prices rose to a three-week high on Wednesday as the Organisation of the Petroleum Exporting Countries and its Russia-led oil-producing allies (OPEC+) announced that they would cut oil production by two million barrels per day (bpd). The United States (US) criticised the move, calling the decision “short-sighted” and said it indicated that OPEC+ is helping Russia.
At the 33rd ministerial meeting of OPEC+ members in Vienna, the group said it made the “proactive and preemptive” decision in light of “the uncertainty that surrounds the global economic and oil market outlooks, and the need to enhance the long-term guidance for the oil market.” It said members would start making the required cuts from November.
The move to slash production by two million bpd, about 2% of the global oil supply, raised oil prices. Brent crude rose by $1.57 to $93.37 per barrel on Wednesday, the highest level since 15 September. Similarly, the US West Texas Intermediary (WTI) crude increased by 1.4% to $87.76 a barrel. OPEC+ officials told Reuters that the cut would help recover oil prices, which had dropped from $120 to $90 in July amid a global economic recession, interest rate increases by the US Federal Reserve, and a strong US dollar.
However, the US rebuked the group’s decision to cut production. National Security Advisor (NSA) Jake Sullivan and National Economic Council Director Brian Deese said in a joint statement that President Joe Biden “is disappointed by the short-sighted decision” of OPEC+, especially when the global economy is suffering due to Russia’s invasion of Ukraine. “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,” the statement noted.
Image source: AKOS STILLER/BLOOMBERG
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