Page 4 - FSUOGM Week 40 2022

FSUOGM COMMENTARY FSUOGM

OPEC+ makes 2mn bpd cut,

angering the US

Months of badgering by Western leaders counted for nought this week as OPEC+ announced a

2mn bpd quota reduction that serves to bolster prices and cover up issues raising production.

OPEC+ THE OPEC+ group of oil producers made the commentators opine that the group now views
decision to cut combined output by 2mn barrels $90 per barrel as a non-negotiable price floor,
WHAT: per day (bpd) when they met in person this week though the Saudi government has vehemently
The reduction will lead to for the first time since the coronavirus (COVID- denied any desire to control prices.
an effective output drop 19) pandemic began. It comes despite fears about
of around 1mn bpd. the state of the global economy and follows a Criticism and collaboration
lengthy period during which Middle Eastern The cut drew immediate criticism from major
WHY: oil producers in particular have been urged to consuming nations, led by the US, whose Pres-
Price volatility, increase output as they near theoretical output ident Joe Biden lobbied hard earlier in the year
concerns about future highs. to encourage OPEC+ members to raise output.
upward production The reduction was the group’s second in as The White House published a statement by
and dedication to the many months, with September’s decision wiping National Security Advisor Jake Sullivan and
long-standing deal are out the 100,000 bpd added to output in August. National Economic Council Director Brian
all thought to have been Over the previous 18 months OPEC+ had Deese, which said Biden had been “disappointed
factors in the decision. been working to return around 10mn bpd of by the short-sighted decision by OPEC+ to cut
supplies taken off the market to stem the mas- production quotas while the global economy is
WHAT NEXT: sive losses experienced by oil exporting nations dealing with the continued negative impact of
The US has called out when crude prices plummeted in Q2 2020. Putin’s invasion of Ukraine”. The true source of
the move, threatening The slow build-back ensured that prices rose this disappointment is likely to be the upward
action to reduce OPEC’s steadily, but renewed volatility amid conflict pressure it will have on fuel prices just over a
influence on the market. and concerns about demand has necessitated month before Biden faces a challenging midterm
action in the opposite direction as many market election.

P4 www. NEWSBASE .com Week 40 06•October•2022