“OPEC Plus” cuts oil production by 100,000 barrels per day

OPEC Plus, which includes OPEC member countries and allies led by Russia, agreed on Monday to slightly reduce oil production to boost prices that have fallen due to fears of an economic slowdown. Crude producers will cut production by 100,000 barrels per day, which is equal to 0.1 percent of global demand, in October, and they also agreed that a meeting could be held at any time to adjust production policy before the next meeting scheduled for October 5. The decision effectively maintains the status quo while OPEC faces severe fluctuations in oil prices, affected by multiple factors in both directions. Matthew Holland, an analyst at Energy Aspects, an energy research firm, said: “OPEC Plus is concerned about long-term volatility in prices due to weak macroeconomic confidence, weak liquidity, renewed Chinese shutdowns (to combat Covid-19), as well as uncertainty about a possible agreement between the United States and Iran. and efforts to impose a ceiling on Russian oil prices. Saudi Arabia, the largest producer in the Organization of the Petroleum Exporting Countries, last month signaled the possibility of cutting production to address what it sees as an exaggerated decline in oil prices. Brent crude fell to about $96 a barrel from $120 in June, amid fears of an economic slowdown and recession in the West. The decline in the price of crude also came against the backdrop of the possibility of an increase in supplies thanks to the return of Iranian crude to the market, if Iran succeeded in reviving the 2015 nuclear agreement with world powers. Iran is expected to add 1 million barrels per day to global supply, if sanctions are eased, although prospects for a nuclear deal appeared more murky on Friday. However, there are signs from the physical market that supply is still limited, many OPEC countries are producing less than targeted, and new Western sanctions threaten Russian exports. Russia has said it will halt supplies to countries that support the idea of ​​capping prices for Russian energy supplies in the midst of the military conflict in Ukraine. Russia has also continued to reduce gas shipments to Europe, which will likely lead to further price hikes.