Fuel prices threatened to rise: OPEC+ reduces oil production

Created: 06/10/2022, 11:30 am

By: Simon Mones

OPEC+ announced on Wednesday that it would produce less oil.

The price of oil then rose and could result in higher fuel prices in Germany.

Fuel prices in Germany fell significantly in September.

One reason for this was the oil price, which had also fallen significantly.

What makes ADAC and motorists happy is unlikely to be particularly popular with the OPEC+ (Organization Of The Petrolium Exporting Countries) oil alliance.

The result: the 23 member states have agreed on the greatest reduction in production since 2020.

The OPEC+ states want to produce two million fewer barrels of oil per day.

The move is intended to 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.

OPEC+ significantly reduces oil production.

That could drive up fuel prices.

© Sebastian Widmann/dpa

Fuel prices threatened to rise: OPEC+ reduces oil production

Oil prices rose slightly on Wednesday in response to the cut in production.

A barrel (159 liters) of the North Sea Brent cost 93.06 US dollars (93.92 euros) and thus 1.25 US dollars (1.26 euros) more than on Tuesday.

The price for a barrel of the US West Texas Intermediate (WTI) variety rose by 0.87 dollars (0.88 euros) to 87.36 dollars (88.17 euros).

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There was criticism above all from the USA, which had been demanding an increase in production for months – also in the interests of the global economy.

President Joe Biden called the decision "short-sighted" and disappointed, said Biden's national security adviser Jake Sullivan and White House director of the National Economic Council Brian Deese.

The bottom line is that the offer is not reduced in its entirety by the amount described on paper.

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

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

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

Russia will also have to look for other buyers due to the upcoming oil embargo by the EU countries.

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Fuel prices threatened to rise: OPEC+ has a market share of 40 percent

The OPEC+ decision could have far-reaching consequences for motorists.

The downward trend in fuel prices could be slowed down by rising oil prices.

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

Allianz has a global market share of around 40 percent.

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The ADAC also expects that the OPEC+ decision will affect fuel prices in Germany.

Accordingly, it is again advisable in the coming weeks to compare the prices for diesel and petrol before filling up - for example via apps on the smartphone.

Drivers should also refuel in the evening hours, as that is when it is cheapest.