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Oil alliance OPEC+ cuts production significantly

2022-10-05T16:45:08.727Z

Gasoline and diesel threaten to become more expensive again: In view of the sharp drop in oil prices, ministers from 23 countries have reduced the agreed quantities for production - against the will of the USA.



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Deep pumps for oil production: Biden criticizes "short-sighted" cuts

Photo: Mohssen Assanimoghaddam / dpa

Despite concerns about a global recession triggered by high energy prices, 23 oil-producing countries have agreed on the sharpest production cuts since 2020.

The oil alliance Opec+ is reducing its oil production.

From November onwards, the association of 23 countries will produce two million barrels (159 liters each) less oil per day, as announced by OPEC in Vienna.

The serious intervention should at least stabilize the oil price, which has recently fallen by up to 30 percent.

It comes "given the uncertainty surrounding the global economic and oil market outlook and the need to improve long-term oil market guidance," OPEC said.

Last but not least, the USA has been demanding an increase in production from the Opec+ countries for months, also in the interests of the global economy.

US President Joe Biden thus also speaks of "short-sighted" cuts - and is already calling for ways to boost domestic energy production.

OPEC+ refers to security of supply

The lower delivery volume could also have consequences for motorists.

At the pumps, the price of petrol could rise again.

The influence of the OPEC+ cartel, which was expanded to include ten non-OPEC countries in 2016, remains significant.

Allianz has a global market share of around 40 percent.

Opec+ defended the move as responsible.

It's not just about its own income, but about security of supply and reliability, said Saudi Arabian Energy Minister Abdulasis bin Salman.

A graphic presented at the press conference was intended to illustrate that the price of oil rose by only a few percent between January and September - in complete contrast to the explosion in the costs of gas, liquid gas and coal.

The bottom line is that the offer is not entirely reduced by the amount described on paper.

Some states such as Nigeria, Angola and Russia are already producing less than the previous agreements allow.

The oil cartel's production in August was about 3.4 million barrels a day below agreed levels, according to the International Energy Agency.

"This is also due to a lack of investment in the oil production infrastructure, for example in Nigeria and Angola, as well as the western sanctions against Russia," said Commerzbank analyst Carsten Fritsch.

Russia must also find new buyers for its crude oil from December.

Then an almost EU-wide embargo on the import of Russian crude oil will come into force.

So far, around two million barrels are still being delivered from Russia to the EU every day.

A specialist committee is to discuss the need for adjustments to oil production every two months in future.

Since the beginning of the corona crisis, the committee and the ministers have met monthly.

If there is no extraordinary need, the ministers want to meet again only twice a year as before.

The next meeting is scheduled for December 4th.

Apr/dpa/Reuters

Source: spiegel

All business articles on 2022-10-05

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