FRANKFURT, Germany (AP) – OPEC and the other oil-producing nations, including Russia, reduced their oil supplies to the world economic system by up to 100,000 barrels a day, demonstrating their displeasure over the prices of crude which have dropped due to worries about recession.
The Monday decision by the energy ministers will mean that the reduction for October will roll back the almost symbolic rise by the exact amount that was imposed in September. This follows a statement in September by the energy minister of Saudi Arabia that the company could cut its output at any point.
Oil producers like Saudi Arabia have resisted calls from U.S. President Joe Biden to pump more oil in order to reduce the cost of gasoline and ease the cost to consumers.
However, worries about the sluggishness of future demand have pushed prices down from June's peak of more than $120 per barrel. This has cut into the windfalls for budgets of OPEC and other countries, while also being an advantage for motorists who reside in the U.S. as pump prices have dropped.
The energy ministers stated that the increase in September was only for the month and that the committee could convene at any time to discuss market trends.
Other elements are in play that could impact how much oil is priced. One of them is that the Group of Seven major democracies are planning to impose a price limit on imports of Russian petroleum and the impact that could have on the market. The price for the cap hasn't been decided.
In the meantime, a deal between Western nations and Iran to curb Tehran's nuclear program may reduce sanctions and allow over 1 million barrels Iranian oil re-entry into the market over the next few months. But tensions between the U.S. and Iran appear to be rising in the last few days: Iran seized two U.S. naval drones in the Red Sea, and U.S., Kuwaiti, and Saudi warplanes flew over the Middle East on Sunday in an act of strength.
Oil prices have fluctuated the last few years: Recession fears have driven them lower, and fears of a possible loss of Russian oil due to sanctions related to their incursion into Ukraine have pushed them higher.
Recently, fears of recession have gained ground. Economic experts in Europe are predicting an economic recession before the end of the year because of rising inflation fueled by rising energy costs as well as China's severe restrictions designed to stop the spread of coronavirus has slowed the growth of the world's largest economy.
These lower prices of oil have proved to be an advantage for U.S. drivers, which has brought gasoline prices down by $3.82 per gallon after record highs of nearly five dollars in the month of June.
In that month, the fear about the possibility that U.S. and European sanctions could eliminate Russian crude off the markets pushed Brent to a record $123. The concerns are still in the open because European sanctions targeting Russian oil imports won't come into effect until the close of the calendar year.
