Why Did OPEC Cut Production For October Targets?

Why Did OPEC Cut Production For October Targets?

AFP via Getty Images On Monday, the Organization of the Petroleum Exporting Countries (OPEC) shocked the oil market when it announced plans to reduce October oil production. OPEC+ (which includes OPEC and allied oil-producing nations like Russia) agreed to shave some 100, 000 barrels per day (bpd) off next month's production targets. Monday's announcement is unusual because it marks the first intentional output decline since the middle of the pandemic. The move also effectively rolls back the production increase OPEC agreed to last month by the same number of barrels. A statement from OPEC+ notes that the group agreed to the 100, 000 bpd adjustment "only for the month of September." According to U. S. Energy Information Administration data, OPEC members produce around 40% of the world's crude oil. However, OPEC members export about 60% of the total globally traded petroleum by volume. Thanks to their market dominance, OPEC decisions can greatly sway oil prices, in turn impacting consumers and investors. But the question remains: why did OPEC cut oil production? OPEC is an international group of oil-producing countries led by Saudi Arabia. The group has recently raised alarm over recent oil price declines, as well as weakened Chinese demand