Oil cartel agrees to cut output by 2-million barrels a day despite strong US pressure, further squeezing supplies
Picture: BLOOMBERG
Opec and its allies agreed on Wednesday to reduce their collective output by 2-million barrels a day from November. The outdated production baselines used to measure the curbs means that actual oil supply will only fall by about half that amount, but it’s still the biggest cut since 2020 that risks adding another shock to the world’s economy.
Earlier on Wednesday, US officials were making calls to counterparts in Gulf Arab states trying to discourage the production cuts, according to people familiar with the situation. President Biden has long been campaigning for Opec+ to boost output, visiting Saudi Arabia earlier this year in search of lower pump prices for Americans ahead of midterm elections in November.
After the meeting, Nigerian minister of state for petroleum resources Timipre Sylva was frank about the group’s motivation for cutting output. The cut of 2-million barrels a day will be measured against the same baseline as the previous Opec+ agreements. Several member countries are already pumping well below those levels as their oil industries face various challenges, ranging from long-term underinvestment to international sanctions.
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