stockmarketwalk According to OPEC+ leader Saudi Arabia, the oil production cut by 2 million barrels per day reacts to the rising interest rates worldwide and weakening global economy. The reduction in production corresponds to 2% of global demand.
Saudi Arabia dismissed criticism that it has colluded with OPEC+ member Russia to hike prices, saying the West is often driven by “wealth arrogance” while criticizing the group.
OPEC+’s decision was made when the global economy grapples with the ongoing negative impact of the invasion in Ukraine.
The U.S. administration will continue to review whether to release more strategic oil reserves at lower prices.
Saudi Energy Minister Abdulaziz bin Salman said OPEC+ must act proactively as central banks around the world “belatedly” attempt to fight rising inflation with higher interest rates.
According to US Treasury Secretary Janet Yellen, this will “unhelpful and unwise” for the global economy, particularly in emerging markets.
Days after the OPEC+ meeting, senior Iraqi politician Mohammed al-Sudani said the country needs money to stimulate the economy. Therefore, they will ask OPEC+ to review the country’s share.
He said the country needs to sell more oil to finance the economic recovery after a crippling war with Islamic State and other militants. Furthermore, the country needs to sustain the country’s large population. Based on the OPEC’s press release, Iraq needs to reduce its oil production by 220,000 barrels per day by the end of next year.
In September, OPEC+ increased oil production by 100,000 barrels per day which was equivalent to 0.1% of global demand.
The next OPEC+ meeting will occur on December 4th. As of now, OPEC+ will meet every six months instead of monthly.
Key takeaways:
- OPEC+ announced oil production cut by 2 million barrels per day
- The reduction corresponds to 2% of global demand
- The rising interest rates and weakening global economy are among the reasons
- The U.S. administration criticized the decision, calling it “shortsighted.”
