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OPEC+ Discusses Potential Output Cuts

FILE PHOTO: A 3D-printed oil pump jack is seen in front of displayed OPEC logo in this illustration picture, April 14, 2020. REUTERS/Dado Ruvic//File Photo

BNR – On Saturday, OPEC and its partners will begin a two-day period of discussions that might result in more output restrictions.

According to OPEC+, the reduction might amount to 1 million barrels per day. The organisation is dealing with falling oil prices and an impending supply glut.

OPEC+ produces around 40 per cent of the world’s crude oil. As a result, its policy actions can have a significant influence on oil prices.

OPEC+ Considers One Million bpd Cuts

According to multiple OPEC+ sources, cutbacks are considered as one possibility for Sunday’s session, when OPEC+ ministers meet in Vienna. The sources said that the reduction might total 1 million barrels per day.

This is compounded by the current 2 million barrels per day reduction and voluntary 1.6 million barrels per day reduction. If authorised, the reductions would be 4.66 million barrels per day or around 4.5 per cent of world demand.

“This number is premature,” said Iraq’s oil minister Hayan Abdel-Ghani said when asked about the possible cut.

Usually, production cuts go into effect the month after they are agreed upon. Ministers might, however, agree on a later deployment date.

West Accusations of Price Manipulation

Western countries have accused OPEC of manipulating oil prices and harming the global economy through excessive energy expenses. Furthermore, the West accused OPEC of leaning too closely with Russia, despite Western sanctions imposed in response to the invasion of Ukraine.

In response, OPEC leaders have stated that the West’s decade of printing money has pushed inflation. Furthermore, it has compelled oil-producing countries to act in order to protect the value of their principal export.

Asian countries such as China and India have purchased the majority of Russian oil exports. Additionally, they refused to abide by Western sanctions on Russia.

“We look forward to a resolution that will secure sustainability of balance of supply and demand” said UAE’s Energy Minister Suhail Al Mazroui.


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