OPEC agrees to cut production after oil price crash
The Organization of the Petroleum Exporting Countries and allied oil-producing nations, including Russia, agreed to cut 100,000 barrels per day from their production targets in October.
OPEC+ agreed to “return to August 2022 production level…noting that the upward adjustment of 0.1 [million barrels per day] at the production level was only scheduled for September 2022,” the group said in a statement.
Brent futures — the global benchmark — traded up 3.6% to $96.40 a barrel as of 8:45 a.m. ET Monday.
But a drop of more than 20% in global oil prices since early June – US oil prices have fallen 7% in the past week alone – has producers focused on the risk that a sharp economic slowdown in China , in the United States and Europe will undermine demand for their kegs.
Gasoline prices in the United States have also slipped, with the national average for a gallon of regular unleaded dropping from over $5 in mid-June to $3.79 on Monday.
In its August market report, OPEC cut its own estimate of global demand for cartel crude oil by 300,000 barrels per day for 2022, and by the same amount for 2023.
The Paris-based International Energy Agency said last month that the rapid rise in oil demand triggered by the easing of pandemic restrictions was fading and falling to a barely noticeable 40,000 barrels per day in the world. fourth quarter of this year.
Russian supplies have also held up better than many expected in the face of Western sanctions, with millions of barrels a day being diverted to China and India. According to the IEA, Russian oil production was just 310,000 barrels per day below pre-war levels in July.
Also fueling OPEC’s thinking: a possible increase in supply if Iran is able to agree on a new nuclear agreement with the United States and Europe that would ease sanctions on its exports.