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Tuesday, March 28, 2023

Biden Criticizes OPEC+’s Agreement to Significantly Reduce Oil Production

Biden would continue to consider whether to release additional strategic oil supplies to cut costs

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UNITED STATES: On Wednesday, OPEC+ decided to drastically reduce oil output, reducing supplies in an already constrained market and setting off one of its largest conflicts with the West. The U.S. government criticised the unexpected decision as being foolish.

Saudi Arabia, the de facto leader of OPEC, stated that the output reduction of 2 million barrels per day (bpd), or 2% of the world’s supply, was required in response to rising interest rates in the West and a deteriorating global economy.

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The kingdom rejected claims that it was working with OPEC+ member Russia to raise prices and asserted that Western criticism of the organisation was frequently motivated by “wealth arrogance.”

President Joe Biden would continue to consider whether to release additional strategic oil supplies to cut costs, according to the White House.

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Oil prices, which have fallen to approximately $90 from $120 three months ago on concerns of a worldwide economic slowdown, rising U.S. interest rates, and a stronger dollar, may rise as a result of the reduction in oil supplies announced in Vienna on Wednesday.

Abdulaziz bin Salman, the Saudi energy minister, claimed that OPEC+ had to act quickly as central banks around the globe proceeded to “belatedly” combat growing inflation with higher interest rates.

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Since OPEC+ fell nearly 3.6 million barrels per day short of its output target in August, the 2 million bpd production cuts announced on Wednesday are based on current baseline data, meaning they would be less severe.

Western sanctions against nations like Russia, Venezuela, and Iran as well as production issues with producers like Nigeria and Angola contributed to underproduction.

The actual cuts, according to Prince Abdulaziz, would be 1.0-1.1 million bpd.

Goldman Sachs analysts put the figure at 0.4-0.6 million bpd and Jefferies analysts at 0.9-0.9 million bpd, respectively, stating that cuts would primarily come from Gulf OPEC members like Saudi Arabia, Iraq, the United Arab Emirates, and Kuwait.

Also Read: US Sanctions Indian Company For Iran Oil Deal

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