oil cartel OPEC and its Russian-led allies have announced major cuts in production.
The decision to cut oil production by two million barrels a day will push prices up and add pain to Western countries already battling skyrocketing inflation.
In Vienna, a group of 10 exporters led by OPEC cartel ministers and Russia agreed to reduce production by two million barrels per day from November.
compromise was a slap in the face President Joe Bidenwhose administration led a frantic diplomatic mission to persuade OPEC+ members to vote against production cuts.
A White House official said President Biden was “disappointed by the short-sighted decision” and that his administration would “consult Congress on additional tools and officials to ease OPEC’s control over energy prices”.
President Biden’s political opponents drew criticism. “total failure. OPEC is laughing at thatHouse of Representatives Minority Whip Steve Scalise wrote on social media.
Oil prices immediately climbed as news of the decision broke and the stock market’s rally slowed.
OPEC’s move – which includes major oil-producing countries such as Iran, Iraq, Kuwait and Saudi Arabia – is the biggest cut since 2020 and despite concerns it could fuel inflation and prompt central banks to raise interest rates. could.
Oil prices fell in recent weeks before the war in Ukraine over concerns of a global recession, but have risen in recent days on hopes of a production cut.
The main international crude contract, Brent, jumped 2% after the decision before ending up 1.7% at $93.37 a barrel.
“Oil futures are expected to continue their rally in the short and medium term, but the long-term upside is likely to be limited by continuing concerns over a global slowdown and rising inflation,” said Srijan Katyal, international brokerage ADSS.
Swissquote analyst Ipek Ozkardskaya warned that Big Cut Could “Backfire” on OPEC+ if investors fear it will push inflation further and force central banks to raise interest rates so much that it triggers a recession.
“The higher the energy prices, the quicker the demand for central banks to lower prices,” she said before announcing the decision.
Saudi prince pulled up on journalist
In a press conference following the verdict, Saudi Energy Minister Prince Abdulaziz bin Salman Al Saud took a dig at Reuters reporter Alex Lawler and declined to answer questions.
In a clip shared widely on social media, he accused the news agency of relying on anonymous sources rather than an official spokesperson.
“You’ve got it wrong twice,” said Prince Abdulaziz, referring to an article on Saudi Arabia and Russia. $100 price target for oil,
“You [Reuters] He didn’t do a proper job,” he said, adding that he spent time speaking with a journalist to clarify the story.
“If you have any questions, direct it to others, but not me,” said Prince Abdulaziz.
“I’m not talking to Reuters, unless you respect the source, who is the energy minister, on behalf of the Saudi government.”
Russia warns, ‘will not supply oil’
Meanwhile, Russia warned on Wednesday that a potential price cap on Russian oil – proposed by the European Union as part of new sanctions on Ukraine – would have a “harmful effect” on global markets.
“Such a device disrupts all market mechanisms and can have a very harmful effect on the global oil industry,” Deputy Prime Minister Alexander Novak told Russian state television.
Prime Minister Novak said Russian companies “will not supply oil to countries” that introduce such a cap.