Fuel Prices Expected To Escalate Again As World’s Giant Producers Decide To Cut Oil Production

Fuel Prices Expected To Escalate Again As World’s Giant Producers Decide To Cut Oil Production

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By Spy Uganda Correspondent

A group of some of the world’s most powerful oil producers on Wednesday agreed to impose deep output cuts, seeking to spur a recovery in crude prices despite calls from the U.S. to pump more to help the global economy.

The Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC allies, a group often referred to as OPEC+, decided at their first face-to-face gathering in Vienna in 2020 to reduce production by 2 million barrels per day from November 2022.

Energy market participants had expected OPEC+, which includes Saudi Arabia and Russia, to impose output cuts of somewhere between 500,000 barrels and 2 million barrels.

The move represents a significant reversal in production policy for the alliance, which slashed output by a record 10 million barrels per day in early 2020 when demand plummeted due to the Covid-19 pandemic.

The oil cartel has since gradually unwound those record cuts, albeit with several OPEC+ countries struggling to fulfil their quotas.

Oil prices have fallen to roughly $80 a barrel from more than $120 in early June amid growing fears about the prospect of a global economic recession.

The production cut for November is an attempt to reverse this slide, despite repeated pressure from U.S.

President Joe Biden’s administration for the group to pump more to lower fuel prices ahead of midterm elections next month.

The White House said in a statement that Biden was “disappointed by the shortsighted decision by OPEC+ to cut production quotas while the global economy is dealing with the continued negative impact of Putin’s invasion of Ukraine.” It said that Biden had directed the Department of Energy to release another 10 million barrels from the Strategic Petroleum Reserve next month.

 

“In light of today’s action, the Biden Administration will also consult with Congress on additional tools and authorities to reduce OPEC’s control over energy prices,” the White House said.

The statement added that the OPEC+ announcement served as “a reminder of why it is so critical that the United States reduce its reliance on foreign sources of fossil fuels.”

To be sure, the burning of fossil fuels, such as coal, oil and gas, is the chief driver of the climate emergency.

Speaking at a news conference, OPEC Secretary-General Haitham Al Ghais defended the group’s decision to impose a deep output cut, saying OPEC+ was seeking to provide “security [and] stability to the energy markets.”

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