The OPEC+ group of oil producing countries, which includes OPEC members and some participating non-member countries, has agreed to cut crude oil production by 2 million barrels per day (bpd), which is higher than analysts’ expectations of a 1–1.5 million bpd cut.
With the relatively small production cut it made at its last meeting, OPEC+ effectively signalled its intention to defend oil prices at around $90 per barrel. Crude oil prices had come down from highs of around $130 per barrel earlier in the year to below $90, but following the news of the new production cut, prices rose back above $90 per barrel.
The US Administration, which had hoped to avoid such cuts, said it was “disappointed” by the decision, which it called “short-sighted”, in a statement from NEC Director Brian Deese and National Security Advisor Jake Sullivan. This statement also detailed a response in terms of a further reserves release and greater production from domestic operators like ExxonMobil and Chevron, the makers of the Mobil and Texaco lubricant ranges:
“At the President’s direction, the Department of Energy will deliver another 10 million barrels from the Strategic Petroleum Reserve to the market next month, […] and he is directing the Secretary of Energy to explore any additional responsible actions to continue increasing domestic production in the immediate term.”
It is worth noting that the actual cut in supply is likely to be lower than 2 million bpd, because many OPEC+ countries had previously failed to fulfil their full quotas due to underinvestment in some assets.