OPEC+ heads for deep supply cuts, clash with U.S.

OPEC+ heads for deep supply cuts, clash with U.S.

VIENNA/LONDON - OPEC+ looks set for deep oil output cuts when it meets on Wednesday, curbing supply in an already tight market despite pressure from the United States and other consuming countries to pump more.

The potential OPEC+ cut could spur a recovery in oil prices that have dropped to about $90 from $120 three months ago due to fears of a global economic recession, rising U.S. interest rates and a stronger dollar.

OPEC+, which includes Saudi Arabia and Russia, is working on cuts in excess of 1 million barrels per day, sources told Reuters this week. One OPEC source said on Tuesday the cuts could amount to up to 2 million barrels per day.

Sources said it remained unclear if reductions could include additional voluntary cuts by members such as Saudi Arabia or if cuts could include existing under-production by the group.

OPEC has been under-producing over 3 million bpd and the inclusion of those barrels would dilute the impact of new cuts.

"Higher oil prices, if driven by sizeable production cuts, would likely irritate the Biden Administration ahead of U.S. midterm elections," Citi analysts said in a note.

"There could be further political reactions from the U.S., including additional releases of strategic stocks along