In a move that is anticipated to push up gasoline prices globally, some of the main oil-producing nations have decided to reduce the quantity of oil they export.
Saudi Arabia and Russia are part of the Opec+ group, which said that it would reduce output by two million barrels per day.
The organization claimed it wished to stabilize prices, which have decreased recently as the global economy has slowed.
However, the decision sparked worries that gas prices might increase.
Oil prices have already increased this week due to expectations that countries will reduce their output, rising over 2% on Wednesday to more than $93 a barrel.
The cut announced on Wednesday, according to a RAC spokeswoman, will “inevitably” result in higher oil prices, driving up the wholesale price of petrol.
The question, according to spokesman Simon Williams, is “whether, and to what degree, merchants choose to pass these extra costs on at their forecourts.”
The Organization of Petroleum Exporting Countries (Opec) and its allies have announced a drop, the largest since the pandemic’s peak in 2020.
It occurs despite US and other countries’ requests to increase oil production following this spring’s jump in oil prices.
US President Joe Biden was “disappointed by the short-sighted choice,” the White House said in a statement. The US committed to keeping oil from its national stocks released “as appropriate” and exploring additional options to try to control gas prices.
The action is also likely to scuttle US-led efforts to control the price of Russian oil, a measure the US had proposed to stop money from entering the country and going toward military spending.
In response to concerns that the world economy is poised to enter a recession, Opec members justified their choice as a response to severe “uncertainty” about future oil demand
Suhail al-Mazroui, the United Arab Emirates’ energy minister, stated that the decision was technical and not political.
By Middle East business correspondent Sameer Hashmi
The most recent OPEC+ decision has implications for geopolitics as well as oil prices.
Three months after President Joe Biden’s contentious trip to Saudi Arabia to persuade the country’s de facto ruler, Crown Prince Mohammed Bin Salman, to pump additional barrels to lower prices, the Saudi-led cartel’s decision to do so is a major setback for the White House.
The action not only runs the risk of driving up oil prices but also jeopardizes Western efforts to limit Russian oil revenues used to fund its conflict in Ukraine.
Many nations, especially Saudi Arabia, will interpret this as a blatant sign of big oil producers.
The OPEC+ energy ministers adopted the plan after a brief discussion that lasted only 30 minutes, suggesting that the choice was broadly supported.
Several OPEC+ countries are already pumping much below their statutory quotas, so even while this is a sizable reduction in terms of oil markets, the actual impact on global supply on the ground would be less.
However, it’s possible it won’t be sufficient to sooth the oil markets’ agitation in the days to come.
The surge in consumer costs that slammed nations all over the world early this year was mostly caused by higher oil prices, which also increased political tensions by driving inflation rates to levels not seen in decades.
There had been some reprieve from the more recent decrease.
Late in September, the price of a barrel of Brent Crude oil was $84.06; this was lower than the springtime high of almost $130.
Caroline Bain, chief commodities economist for research firm Capital Economics, said it was an uncommon time to reduce supplies despite the decline in oil prices and worries about the global economy.
She continued, “Global oil stocks are at historically low levels, and high prices to yet have failed to meaningfully reduce demand.”
Since several nations were already producing less than they had promised, analysts said the impact of the reduction is likely to be less significant than its size may suggest. Capital predicted a 1% decline in world supplies as a result.
The output reduction, according to Kathleen Brooks, director at Minerva Analysis, was the “worst
We might not have reached peak inflation yet, she warned, which “changes the story.”Petrol price warning following Opec oil output reduction
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