Opec+ agreed on Monday to cut crude supply in a bid to prop up oil prices, defying calls from western governments battling to curb inflation in the face of a mounting global energy crisis.
The producer group will cut 100,000 barrels a day from supply from October, reversing an earlier increase of the same amount agreed last month following a visit to Jeddah by US president Joe Biden.
While traders said the amounts were relatively tiny in the global oil market, where demand is about 100 million barrels a day, the signal to Washington and the energy sector was more powerful: Opec and its allies, including Russia, will move to defend oil prices.
“This has a political dimension – Russia wants to make the West pay for the sanctions it has imposed on Moscow,” said Bill Farren-Price, a director at consultancy Enverus. “What better way than to get its Opec+ partners to start tightening the oil market. Biden’s hopes for some sort of accommodation with Saudi Arabia now look naive.”
Teeth grinding and clenching can have more serious effects than annoying your bedfellow
Storm Éowyn: Roscommon reeling and counting the cost
The Whale Tattoo and The Gallopers by Jon Ransom: A pair of intriguing, imperfect novels
Hit (and miss) parade – Frank McNally on the mixed fortunes of a who’s who list from 40 years ago
The policy reversal from Opec+ marks an end to months of supply increases during a rally that took Brent close to a record high earlier this year following Russia’s invasion of Ukraine. But a sell-off in recent weeks pushed Brent crude back below $100 a barrel, amid growing fears of recession in Europe and weaker oil demand from China.
– Copyright The Financial Times Limited 2022