OPEC+ makes small trim to world oil supplies as prices fall
OPEC and allied oil-producing countries, including Russia, made a small trim in their supplies to the global economy Monday, underlining their unhappiness as recession fears help drive down crude prices — along with the cost of gasoline, to drivers’ delight.
The decision for October rolls back a mostly symbolic increase of 100,000 barrels per day in September. It follows a statement last month from Saudi Arabia’s energy minister that the OPEC+ coalition could reduce output at any time.
Oil producers such as Saudi Arabia have resisted calls from U.S. President Joe Biden to pump more oil to lower gasoline prices and the burden on consumers. OPEC+ has stuck with only cautious increases to make up for deep cuts made during the COVID-19 pandemic, which were finally restored in August.
Since then, growing worries about slumping future demand have helped send oil prices down from June peaks of over $120 per barrel, cutting into the windfall for OPEC+ countries’ coffers but proving a blessing for drivers in the U.S. as pump prices have eased.
The supply cut for October is only a small fraction of the 43.8 million barrels per day under OPEC+ production goals, but wrong-footed several analysts’ predictions of no change in output. Oil prices jumped after the announcement.
U.S. crude rose 3.3%, to $89.79 per barrel, while international benchmark Brent was up 3.7%, to $96.50, after the decision.
Oil prices have gyrated in recent months: Recession fears have pushed them down, while worries of a loss of Russian oil because of sanctions over its invasion of Ukraine pushed them up.
Recently, recession fears have taken the upper hand. Economists in Europe are penciling in a recession at the end of this year due to skyrocketing inflation fed by energy costs, while China’s severe restrictions aimed at halting the spread of the coronavirus have sapped growth in that major world economy.
Those falling oil prices have been a boon to U.S. drivers, sending gasoline prices down to $3.82 per gallon from record highs of over $5 in June and offering a potential boost to Biden as his Democratic Party heads into midterm elections.
“The President has been clear that energy supply should meet demand to support economic growth and lower prices for American consumers and consumers around the world,” White House press secretary Karine Jean-Pierre said. “President Biden is determined to continue to take every step necessary to shore up energy supplies and lower energy prices.”
In June, fears that U.S. and European sanctions would take Russian oil off the market helped push Brent to over $123. Prices have fallen sharply in recent weeks as it became clear that Russia is still managing to sell significant amounts of oil in Asia, albeit at sharply discounted prices.
But concerns about the loss of Russian supply are still out there because European sanctions aimed at blocking most Russian oil imports won’t take effect until the end of the year.
from Boston Herald https://ift.tt/OaQCw7e
Post a Comment