VIENNA LONDON Reuters --OPEC is poised for deep oil output cuts when it meets on Wednesday, reducing supply in an already tight market despite pressures from the United States and other consuming countries to pump more.
A possible OPEC cut could spur a recovery in oil prices that have dropped to around $90 from $120 three months ago due to fears of a global economic recession, rising U.S. interest rates and a stronger dollar.
Saudi Arabia and Russia are working on cuttings in excess of 1 million barrels per day, sources told Reuters this week. One OPEC source said on Tuesday that the cuts could amount to up to 2 million barrels per day.
Sources said that it was not clear whether reductions could include additional voluntary cuts by members such as Saudi Arabia or if cuts could include existing under-production by the group.
The inclusion of barrels would dilute the impact of the new cuts, as the OPEC has been under-producing over 3 million barrels per day.
Citi analysts said that the Biden administration would be irritated by the fact that it would be irritated ahead of the midterm elections.
There could be more political reactions from the U.S. including additional releases of strategic stocks along with some wildcards, including the fostering of a NOPEC bill, according to Citi, who spokeswoman for the U.S. antitrust bill against OPEC.
Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries and allied producers of OPEC have said they seek to prevent volatility rather than to target a particular oil price.
On Tuesday, Brent crude rose 3% above $91 per barrel O R The West accused Russia of weaponising energy as Europe suffers from a severe energy crisis and may face gas and power rationing this winter in a blow to its industry.
Moscow accuses the West of weaponizing the dollar and financial systems, such as SWIFT, in retaliation for Russia sending troops into Ukraine in February. Russia calls it a military operation and the West accuses Moscow of invading Ukraine.
Russia has been a part of the OPEC club since 2016. The group has cut and raised output to manage the oil market, but has rarely performed cuts when the market is tight.
The United States is likely to get a cut because Saudi Arabia is pressured to pump more oil prices and reduce revenue for Russia, as a result of the cut.
Saudi Arabia has not condemned Moscow's actions and relations between the kingdom and the administration of U.S. President Joe Biden, who travelled to Riyadh this year, but didn't secure any firm cooperation commitments on energy.