OPEC+ panel considers cutting oil production by 2m barrels per day

By Biodun Busari

A panel of the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) ministers has suggested a reduction to the cartel’s output limits of 2 million barrels per day.

This cut recommendation was crucial as they seek to stop as a slide in oil prices triggered by the weakening global economy.

According to delegates, the recommendation from the group’s Joint Ministerial Monitoring Committee will be discussed by ministers later on Wednesday (today) before they make a final policy decision.

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If the full meeting of OPEC+ ratifies the proposal, it would have a lesser effect on global supply than the headline number suggests because several countries are already pumping well below their quotas.

According to Bloomberg, that means they would already be in compliance with their new restrictions without having to reduce production.

A reduction of 2 million barrels a day in the group’s output target, shared pro rata, would require just eight countries to reduce actual production and would deliver an accurate cut of only 880,000 barrels a day, according to Bloomberg calculations based on September output figures.

It would still be the biggest OPEC+ production cut since 2020, a move that risks adding another shock to a global economy already battling inflation driven by high energy costs.

The report stated that the move would also displease the United States — and possibly generate a response from Washington.

This was hinged on President Joe Biden visiting Saudi Arabia earlier this year in search of higher production and lower pump prices for Americans ahead of the mid-term elections in November.

Earlier on Wednesday, US officials were making calls to counterparts in the Gulf trying to push back against the move to cut production, according to people familiar with the situation.