OPEC+ makes big oil cut to boost prices; pump costs may rise
FRANKFURT, Germany — The OPEC+ alliance of oil-exporting countries decided Wednesday to sharply cut production to support sagging oil prices, a move that could deal the struggling global economy another blow and raise politically sensitive pump prices for U.S. drivers just ahead of key national elections.
Energy ministers cut production by a larger-than-expected 2 million barrels per day starting in November after gathering for their first face-to-face meeting at the Vienna headquarters of the OPEC oil cartel since the start of the COVID-19 pandemic.
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The group said the decision was based on the “uncertainty that surrounds the global economic and oil market outlooks.” Saudi Energy Minister Abdulaziz bin Salman stressed the group’s stated role as a guardian of stable energy markets.
“We are here to stay as a moderating force, to bring about stability,” he told reporters.
Oil is trading well below its summer peaks because of fears that major global economies such as the U.S. or Europe will sink into recession due to high inflation, rising interest rates and energy uncertainty over Russia’s war in Ukraine. The OPEC+ decision could help member Russia weather a looming European ban on most of Moscow’s oil, but its impact will have some limitations because countries in the alliance already can’t meet their quotas.
U.S. President Joe Biden considered the OPEC+ decision “short-sighted while the global economy is dealing with the continued negative impact of (Russian President Vladimir) Putin’s invasion of Ukraine,” White House press secretary Karine Jean-Pierre told reporters aboard Air Force One.
“It’s clear that OPEC+ is aligning with Russia with today’s announcement,” she said.
Bin Salman rejected questions referencing the reaction in Washington or implying that OPEC was assisting Russia, saying the discussion was in a nonpolitical “silo” where the focus was prudent management of oil markets.
Following a token trim last month, Wednesday’s decision is an abrupt turnaround from months of restoring deep cuts made during the depths of the pandemic. As demand rebounded, global energy prices have swung wildly since Russia invaded Ukraine, helping fuel inflation that is squeezing economies worldwide.
