Saudi Arabia and Russia want to reduce production in order to stop the drop in oil prices.
Leading On Wednesday, the oil exporting countries agreed on a reduction of two million barrels in daily crude oil production, reported the news agencies AFP and Bloomberg.
The Organization of the Petroleum Exporting Countries Opec and ten oil-producing countries outside the organization met in Vienna to decide on production volumes.
The decision was expected, as the two largest producers, namely Saudi Arabia and Russia, both want to reduce production so that oil prices start rising again.
More expensive oil is expected to further accelerate already high inflation in Europe and the United States. Russia also benefits from the rise in prices, whose oil exports are being tried to be limited in Western countries.
The price of crude oil jumped to more than 140 dollars per barrel at the beginning of the Russian war of aggression, but later fell to around 90 dollars. Prices have been weighed down by concern about the drop in demand and the expectation that the global economy will drift into recession.
Waiting of the sizeable cut raised market prices while waiting for the decision. The North American reference quality WTI already rose nine percent in two days. The price of a barrel of Brent, the reference quality, was also on the rise and fluctuated around $92 on Wednesday.
Opec+, i.e. 13 members of Opec and ten external oil-producing countries, reduced production by almost 10 million barrels per day in the spring of 2020, when the corona pandemic froze the global economy and the demand for crude oil.
Production quotas were raised to their former level this year, but not all producing countries have been able to produce the amount allowed by their quotas. It means that the actual production cut is becoming smaller.
Oil-buying countries have been asking producing countries to increase production, but the appeals have fallen on deaf ears. President of the United States Joe Biden personally went to Saudi Arabia in the summer to plead for a bigger production, but got no response.
More expensive oil may hamper the Democrats’ election campaign before the midterm elections in the United States in November.
Updated on October 5, 2022: Opec is an organization of oil exporting countries. Previously, the organization was referred to as the Organization of Oil Producing Countries.
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