OPEC+ announced Wednesday that it will cut oil production by 2 million barrels per day in a move that may accelerate gasoline and fuel oil price increases.
Crude oil prices have been trending lower since July and this new cut is intended to reverse that. Russia needs petroleum prices to remain elevated to fund its failing war in Ukraine and the other member nations prefer the $100+ per barrel oil prices they had become used to as of late.
In a statement, the group said the decision to cut production was made “in light of the uncertainty that surrounds the global economic and oil market outlooks.”
Saudi Arabia, the group’s de facto leader had indicated earlier this week that OPEC+ might cut up to 1 million barrels per day. A 2 million barrel per day reduction is a clear sign that OPEC is back in control of oil, gas and fuel oil prices now that the Biden administration has all but halted new U.S. production.
The cut comes just a few weeks before the midterm elections and President Biden said Wednesday that it is concerning.
“I need to see what the detail is. I am concerned, it is unnecessary,” he said in response to a question from CNN’s Arlette Saenz as he departed the White House for Florida.
As gasoline prices increase, Biden and Democrats will face increased scrutiny for emptying the Strategic Petroleum Reserve to no effect. Higher fuel prices will also exacerbate already sky-high inflation forcing the Federal Reserve to continue raising interest rates.
There may be nothing left to stop a global recession – or worse.
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