OPEC+ to reduce crude oil output by 2 million barrels per day

6 Oct 2022 , 03:37 PM

As part of their efforts to stop the decline in oil prices brought on by the deterioration of the global economy, a panel of OPEC+ will reduce oil supply by 2 million barrels per day.

The idea would have less of an effect on the world supply than the headline number suggests if it were approved by the full meeting of the Organization of Petroleum Exporting Countries and its allies because numerous nations already pump far below their limitations. They wouldn't need to restrict production because they would already be in compliance with their new constraints.

According to Bloomberg calculations based on September output numbers, a genuine drop of only 880,000 barrels a day would be achieved by sharing the group's output target reduction of 2 million barrels a day among just eight countries.

Even so, it would represent the largest OPEC+ output decrease since 2020, which runs the risk of providing even another shock to the already fragile global economy already struggling with inflation brought on by rising oil prices.

The deal between the Organization of Petroleum Exporting Countries and allies like Russia would reduce supplies in a market that is already constrained.

The cuts, which represent approximately 2% of the global supply, were attributed by Saudi Arabia, the group's de facto leader, to rising interest rates in the West and a deteriorating global economy.

In an apparent allusion to proposed legislation that may subject cartel members to antitrust lawsuits, the White House declared that it will engage with Congress on new ways to lessen the cartel's grip over energy pricing.

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