The OPEC+ alliance of oil-exporting countries decided Wednesday to sharply cut production to support sagging oil prices, a move that could deal the struggling global economy another blow and raise politically sensitive pump prices for US drivers just ahead of key national elections. Energy ministers cut production by a larger-than-expected 2 million barrels per day starting in November after gathering for their first face-to-face meeting at the Vienna headquarters of the OPEC oil cartel since the start of the COVID-19 pandemic, the AP reports. The group said the decision was based on the "uncertainty that surrounds the global economic and oil market outlooks." Saudi Energy Minister Abdulaziz bin Salman stressed the group’s stated role as a guardian of stable energy markets.
Oil is trading well below its summer peaks because of fears that major global economies such as the US or Europe will sink into a recession due to high inflation, rising interest rates and energy uncertainty over Russia's war in Ukraine. The OPEC+ decision could help member Russia weather a looming European ban on most of Moscow’s oil, but its impact will have some limitations because countries in the alliance already can’t meet their quotas. President Biden considers the decision "short-sighted while the global economy is dealing with the continued negative impact of Putin’s invasion of Ukraine," White House press secretary Karine Jean-Pierre told reporters aboard Air Force One. "It’s clear that OPEC+ is aligning with Russia with today’s announcement," she said.
OPEC+, an alliance formed in 2016, includes the 13 members of the OPEC cartel plus ten non-members including Russia and Mexico, the BBC reports. Following a token trim last month, Wednesday's decision is an abrupt turnaround from months of restoring deep cuts made during the depths of the pandemic. Part of the OPEC+ cut is "on paper" because members already can’t supply enough oil to hit their allotments, said Gary Peach, oil markets analyst at energy information firm Energy Intelligence. "Only about half of that is real barrels." Sources tell CNN that the Biden administration launched "a full-scale pressure campaign" in recent months to try to persuade Middle Eastern allies not to cut production.
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