OPEC Plus Agrees to Cut Production by 100,000 Barrels a Day

The cut “sets up a confrontation in terms of expectations of Western developed economies versus the Gulf States,” said Richard Bronze, head of geopolitics at Energy Aspects, a market research firm.

OPEC officials, led by Saudi Arabia, have expressed alarm at the recent slide in the price of oil. “They are determined to stop prices from falling too much,” said a note to clients from Energy Aspects.

Two big unknowns haunt the market. One is how long renewed Covid lockdowns in China, the world’s largest oil importer, will continue to sap demand there. The second is whether a deal will be reached over Iran’s nuclear program that could eventually unleash substantial volumes of new Iranian oil on the market.

Saudi Arabia, which chairs OPEC Plus, has been reminding the markets recently that it is ready to intervene if it sees a danger of price declines running out of control. Saudi Arabia is also sending a signal to the Biden administration that the kingdom is prepared to take steps, like cutting production, that might pre-empt the downward pressure on oil prices from a nuclear deal with Iran.

Article source: https://www.nytimes.com/2022/09/05/business/opec-plus-meeting.html