...

OPEC+ cut to further raise tensions with the West

Oil&Gas Materials 10 October 2022 10:34 (UTC +04:00)
OPEC+ cut to further raise tensions with the West
Laman Zeynalova
Laman Zeynalova
Read more

BAKU, Azerbaijan, October 10. OPEC+ cut will further raise tensions with the West, Trend reports with reference to Fitch Solutions.

OPEC+ announced a major production cut of 2 million barrels per day (bpd) starting November to bolster oil prices. The oil alliance decided to cut its overall output by 2 million bpd from its August production targets. The reduction equals around 2 percent of this year's global oil demand, which is estimated by OPEC at around 100 million bpd.

“The US in particular has put considerable pressure on the group over the past year to accelerate the return of cut barrels to market and help temper price gains. However, OPEC+ has largely resisted this pressure, as per its preference for continued higher prices. This has somewhat frayed relations between the US and its allies in the Middle East and resulted in a ‘tit-for-tat’ approach to energy policy, with the US raising storage releases to offset production cuts by the group,” reads the latest report from Fitch Solutions.

The company experts point out that the same dynamic is seemingly still in play, with US President Biden announcing an additional 10mn bbl storage release for November in the immediate aftermath of the OPEC+ cut announcement.

“This has led to speculation that Washington may seek to further ramp-up pressure on the group, including via revival of the NOPEC bill (allowing producers to be sued in US courts on antitrust grounds) and potential curbs on military aid. However, the NOPEC bill has failed repeatedly in the past (and still faces considerable barriers to passage and implementation), while curbs on military assistance would be severe reaction and potentially damaging to broader US strategic interests in the region. Instead, Biden will likely focus his efforts on encouraging higher domestic oil production and extending storage releases, albeit with little impact on prices, in our view.”

---

Follow the author on Twitter: @Lyaman_Zeyn

Tags:
Latest

Latest