〇PEC Allied oil producers, including Russia, also cut supplies to the global economy by 100,000 barrels per day, highlighting their frustration that oil prices have fallen on fears of a recession.
Yesterday’s decision by the energy minister means that October’s cuts will roll back September’s nearly symbolic equivalent increase. The move follows Saudi Arabia’s energy minister’s statement last month that the group could cut production at any time.
Oil-producing countries such as Saudi Arabia have resisted calls by President Joe Biden to produce more oil to bring down gasoline prices and the burden on consumers.
However, concerns over future weak demand pushed prices down from their June peak of over $120 a barrel, reducing the windfall in government budgets in OPEC+ countries, but easing pump prices , proved to be a blessing for US drivers.
The energy minister said in a statement that the September price hike was for that month only and that the group could meet again at any time to address market developments.
There are other factors lurking that could affect oil prices. One is that major G7 democracies are planning to impose price caps on Russia’s oil imports, and the impact that could have on the market. Pricing levels for caps have not yet been set.
Meanwhile, a deal between Western powers and Iran to limit Tehran’s nuclear program could ease sanctions and put more than a million barrels of Iranian oil back on the market in the coming months. Tensions between the United States and Iran appear to be on the rise these days. Iran seized two US navy drones in the Red Sea, and US, Kuwaiti and Saudi fighter jets flew over the Middle East on Sunday in a show of force.
Oil prices have soared in recent months. Fears of a recession pushed prices lower, while fears of Russia’s oil losses due to sanctions over its invasion of Ukraine pushed prices higher.
Recently, fears of a recession have increased. European economists expect a sharp rise in inflation, fueled by energy costs, to plunge the country into a recession later this year, but China’s tougher regulations aimed at stemming the spread of the coronavirus are a major threat to the world economy. weakening economic growth.
These lower oil prices benefited US drivers, with gasoline prices dropping from record highs of over $5 in June to $3.82/gallon.
Brent was pushed above $123 that month on fears that US and European sanctions would take Russian oil out of the market. Those concerns remain as European sanctions targeting Russian oil exports won’t take effect until the end of the year. David McHugh, Frankfurt, MDT/AP