By Adedapo Adesanya
The Organisation of the Petroleum Exporting Countries and its allies led by Russia known as OPEC+ on Monday agreed to a marginal cut in crude oil production, ignoring calls for increases to tackle recent surges in energy costs.
The oil producers will reduce output by 100,000 barrels per day, amounting to only 0.1 per cent of global demand, for October.
The alliance also agreed they could meet any time to adjust production before the next scheduled meeting on October 5.
OPEC+ said in a statement that Monday’s decision to revert back to August levels of production was because the upward adjustment was “intended only for the month of September.”
At its last meeting, OPEC+ agreed to a small rise of 100,000 barrels per day for September after US President Joe Biden travelled to Saudi Arabia to plead for a production bump — although it was six times lower than its previous decisions.
The kingdom’s Energy Minister Abdulaziz bin Salman last month had appeared to open the door to the idea of cutting output, which has since received the support of several member states and the cartel’s joint technical committee.
Oil prices have fallen around 25% since early June after touching multi-year highs in March. The decline has been fueled by growing concerns that interest rate hikes and Covid-related restrictions in parts of China could slow global economic growth and curtail oil demand.
Monday’s announcement from OPEC+ comes amid a bitter and escalating energy dispute between Russia and the West, with many in Europe deeply concerned about the prospect of recession and a winter gas shortage.
Meanwhile, market participants are closely monitoring the prospect of a supply boost from Iranian crude if the Middle East country can secure a renewed version of the 2015 nuclear deal that was previously abandoned by former US President Donald Trump.
