OPEC+ cuts production by 2 million bpd, faces strong criticism from the West
The OPEC+ group of the largest oil producing nations announced its decision to cut the output by 2 million barrels per day, effective from November, with most of the burden of cuts to be taken by Saudi Arabia, UAE and Kuwait, as some of member countries cannot reach their production quotas.
The action was signaled by the cartel last week, causing increased diplomatic communication between the Western nations and Saudi-backed oil cartel, as further production cut in already tight oil market, lacking the largest part of supplies from Russia, due to sanctions, would hurt already fragile global economy.
The decision also raised existing fears about possible supply shortages and higher oil prices ahead of winter, as many Western economies, particularly the European Union, already struggle to keep the industry operational, in conditions of lower supplies and skyrocketing prices from alternative sources.
The OPEC+ decision also intensified a diplomatic conflict between the bloc and the United States, which face a mid-term elections and do not want to upset their consumers by fresh rise in oil prices ahead of vote.
Comment from Saudi Energy Minister Abdulaziz bin Salman that the real supply cut would be around 1 to 1.1 million per day and final decision to cut production by 2 million bpd, caused strong criticism from Washington, as the decision was seen as a slap to the face of the US administration by OPEC+ and also pointed to a tight ties between Russia and Saudi Arabia.
The US administration also had a plan to stop oil exports from the country to keep oil prices stable ahead of next-month election, but faced opposition from US oil trade groups, with their next step likely to be a further release from strategic oil reserves, to prevent stronger rise of oil prices in the US.
The decision lifted oil prices to the highest levels in three weeks and likely to push them higher that would deepen the problem to oil importing nations, particularly those from emerging markets, with.
Fresh rise in oil prices, which eased in the third quarter, threatens to push prices towards peaks from the second quarter, when war in Ukraine and subsequent Western sanctions on Russia, pushed oil prices to the highest since 2008