Decision of OPEC, its allies on oil production a mistake: US

Washington, October 19

The move of the OPEC and its allies to cut oil production is a “mistake” and a “short-sighted” decision that has favoured the Russians and the US is going to re-evaluate its ties with Saudi Arabia, the White House has said.

Members of the Organisation of the Petroleum Exporting Countries (OPEC) and their Russia-led allies earlier this month agreed on a major cut in oil production, amidst a downward trend in prices. The 13-nation OPEC cartel and its 10 Russian-led allies agreed to reduce two million barrels per day from November at a meeting in Vienna. It is the biggest cut since the height of the Covid-19 pandemic in 2020.

2 mn barrels cut per day

• On October 5, the OPEC alliance announced a cut in oil production at a meeting
• in Vienna
• 13-nation OPEC cartel and its 10 Russian-led allies agreed to reduce two million barrels per day from November
• Supply cut will also exacerbate tensions between Saudi Arabia and the US
• President Joe Biden to re-evaluate his relationship with Saudi Arabia, a leading oil producer of the world
• Comes at a time when much of the world is already battling soaring energy costs

Global market uncertain: opec

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• The OPEC group has justified the decision due to “uncertainty” that surrounds the global economy and oil market outlook
• The world consumes up to 100 mn barrels of oil a day, so taking 2 mn off the market would have a noticeable effect, a report stated

“The decisions that OPEC made last week, we believe, sided with the Russians and were against the interests of the American people and the families around the world,” White House Press Secretary Karine Jean-Pierre said. President Joe Biden is going to re-evaluate his relationship with Saudi Arabia, a leading oil producer, she added.

On October 5, the OPEC alliance announced a cut in oil production — an amount that could drive oil and gas prices back up after weeks of a downward trend. The meeting of the 24 OPEC oil-producing countries, including Russia, comes at a time when much of the world is already battling soaring energy costs. A supply cut will also exacerbate tensions between Saudi Arabia and the US, the National Public Radio (NPR) reported. OPEC , formed in 2016, includes the 13 Organisation of Petroleum Exporting Countries members and 11 other non-OPEC members.

A dramatic cut in oil production could also help Russia, which is co-chair of OPEC . Its economy is based on energy revenues, now critical to its war effort in Ukraine. Despite sanctions, Russia hasn’t experienced a huge decline in the production, the report said.