OPEC, Announces Massive, Oil Production Cut.
On October 5, OPEC+ announced that it will
cut oil production by 2 million barrels per day (BPD),
the largest cut since the beginning of the COVID pandemic.
CNN reports the move threatens to raise
the price of gasoline just weeks before
crucial midterm elections in the United States.
The reduction equals
approximately 2%
of global oil demand.
Brent crude oil rose 1.5% to
over $93 a barrel following
the announcement.
The news also sent the price
of U.S. oil up 1.7% to reach $88.
CNN reports that the production cuts
will take effect in November prior to
another OPEC+ meeting in December.
According to OPEC, the drastic reduction was made , “in light of the uncertainty that surrounds
the global economic and oil market outlooks.”.
OPEC controls over 40% of global oil production. .
CNN points out that the impact of the cut
may be limited, as OPEC has already been
struggling to meet previous production targets.
An announced cut of any volume is
unlikely to be fully implemented by all
countries, as the group already lags 3 million
BPD behind its stated production ceiling, Jorge Leon, Rystad Energy analyst, via CNN