OPEC+ heads for deep supply cuts, clash with US – The Peninsula

OPEC+ heads for deep supply cuts, clash with US – The Peninsula

Vienna/London: OPEC+ looks set for deep cuts to its oil output targets when it meets on Wednesday, curbing supply in an already tight market despite pressure from the United States and others 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 target 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.

The United States is pushing OPEC not to proceed with the cuts arguing that fundamentals don't support them, a source familiar with the matter said.

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

OPEC+ fell about 3.6 million bpd short of its output target in August.

Washington Reaction

"Higher oil prices, if driven by sizeable production cuts, would likely irritate the Biden Administration ahead of U.S. mid-term elections," Citi analysts said