OPEC nations are considering cutting production by 1 million barrels a day

The OPEC+ group of oil producers will consider cutting production by more than 1 million barrels a day when they meet in person for the first time in more than two years on Wednesday, according to delegates.

A larger than expected reduction would reflect the level of concern that the global economy is slowing rapidly amid rapidly tightening monetary policy. A final decision on the amount of the cuts will only be made at a ministerial meeting in Vienna, the delegates said. A 1 million cut would be the biggest since the pandemic.

Brent crude surged above $125 a barrel following Russia’s invasion of Ukraine in February. It has since fallen to $85, dampening the spectacular windfall of Saudi Arabia, Russia, the United Arab Emirates and other coalition members.

A massive cut risks another shock to the global economy, which is already grappling with energy-related inflation and the slowdown. Consumers, including the US, are demanding more production, and US President Joe Biden visited Saudi Arabia earlier this year in search of a new oil deal – and lower prices for Americans at the pump.

Mr. Biden is also trying to cut the revenue Moscow receives for oil in a bid to weaken Vladimir Putin’s war effort.

An OPEC+ cut would have the opposite effect.

Banks, including JPMorgan Chase & Co, said OPEC+ may need to cut production by at least 500,000 barrels a day to stabilize prices. Helima Croft, chief commodities strategist at RBC Capital Markets LLC, said the group could opt for a double-size cut.

“I suspect they might not want to personally go for a little move,” Ms. Croft said.

The Riyadh-Moscow relationship that underpins the OPEC+ alliance weathered the Russian invasion of Ukraine with no sign of weakening. It’s not yet confirmed if Russia’s oil chief Alexander Novak will attend in person, but if he does it will send a strong message – and prove awkward for Ukraine’s allies in the European Union.

Mr Novak was sanctioned by the US on Friday following Russia’s annexation of four regions of Ukraine, although the EU has not followed suit. When asked about his possible appearance in Vienna, the Austrian government noted that he was not sanctioned.

The ministers meet on Wednesday.

https://www.independent.ie/business/world/opec-nations-to-consider-reducing-output-by-1-million-barrels-per-day-42034361.html OPEC nations are considering cutting production by 1 million barrels a day

Fry Electronics Team

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