Adedapo Adesanya
By Adedapo Adesanya
The oil market went up on Wednesday to a three-week high, the Brent crude rising by $1.57 or 1.7 per cent to $93.37 per barrel and the United States West Texas Intermediate (WTI) crude jumping by $1.24 or 1.4 per cent to $87.76 per barrel.
This occurred after the Organisation of the Petroleum Exporting Countries and allies (OPEC+) agreed to its deepest cuts to production since the 2020 COVID-19 pandemic.
OPEC+ decided to cut its November production quotas by 2 million barrels per day at its physical meeting yesterday. The 23-nation alliance said it took this step, “In light of the uncertainty that surrounds the global economy and oil market outlooks, and the need to enhance the long-term guidance for the oil market, and in line with the successful approach of being proactive, and preemptive, which has been consistently adopted by OPEC and Non-OPEC Participating Countries in the Declaration of Cooperation.”
The group also extended the compensation period to the end of March 2023 for those not meeting their quotas.
Saudi Arabia’s actual September production came in at 10.904 million barrels per day, according to OPEC’s most recent Monthly Oil Market Report—making the Kingdom one of the few OPEC+ members that will realize a nearly complete cut.
Other OPEC producers, such as Angola, Congo, Equatorial Guinea, and Nigeria, are already producing below their reduced November quotas and as such, will not be required to cut production further.
This happened amid a tightening market after OPEC+ missed its production target by 3.58 million barrels per day as several countries were already pumping well below their existing quotas.
However, a White House statement following the OPEC+ decision to defy the Biden administration with an output cut for November vows to find new ways to temper OPEC’s control over energy prices.
The White House warned that the OPEC move would “have the most negative impact on lower- and middle-income countries that are already reeling from elevated energy prices.”
Prices also rose on US government data that showed crude and fuel inventories fell last week as the Energy Information Administration (EIA) said crude inventories posted a surprise draw of 1.4 million barrels to 429.2 million barrels.
Meanwhile, Russian Deputy Prime Minister Alexander Novak said on Wednesday that Russia might cut oil production to offset the negative effects of price caps imposed by the West over Moscow’s actions in Ukraine.
