On October 5, 2022, an OPEC flag is seen in Vienna, Austria. The US reacted angrily to the decision of theOPEC on Wednesday to make its sharpest cuts to production in two years despite pressure from Washington to increase production, especially during the sensitive period as midterm elections approach.
After its first in-person meeting in Vienna on Wednesday, the Organization of the Petroleum Exporting Countries and other oil producers, such as Russia, said it would reduce oil production by 2 million barrels a day beginning in November.
The decision was based on uncertainty surrounding the global economic and oil market outlooks, according to the OPEC.
The decision is technical, not political, according to the United Arab Emirates Minister of Energy Suhail Mohamed Al Mazrouei.
Oil prices have dropped from $120 a barrel in June to around $90 due to growing fears of a global economic recession, which would also affect the US and European Union, and uncertainty caused by the Russia-Ukraine conflict.
After the OPEC announcement, the White House said in a statement that the president is disappointed by the shortsighted decision by the OPEC. At a time when maintaining a global supply of energy is of paramount importance, this decision will have the greatest negative impact on lower and middle-income countries that are already reeling from elevated energy prices. CNN reported that US leaders had mounted a full-scale pressure campaign over the past few days to persuade OPEC members such as Kuwait, Saudi Arabia and the United Arab Emirates to vote against the cuts.
Some of the draft talk points put out by the White House for the Treasury Department on Monday framed the possibility of a production cut as a total disaster and warned that it could be taken as a hostile act. The decision by the OPEC to go ahead with the cuts was widely seen as humiliating for Washington because it came less than four months after US President Joe Biden had pledged to treat Saudi Arabia as a pariah state.
I was one of those people who thought the trip to Saudi went well. David Rothkopf, US Foreign Policy expert, wrote in a tweet on Wednesday that the decision of the OPEC says I'm wrong. The Saudis have sent a clear message that they don't care about relations with Biden. The OPEC decision came just a day after EU energy ministers agreed on a price cap on Russian oil.
Yan Qin, energy market analyst at Refinitiv, told China Daily that an EU oil price cap won't work because energy markets are global and prices are set by supply and demand.
As the EU's ban on Russian oil imports begins in December, analysts think that the supply of oil will be further cut off in the coming months.