Page 45 - Nigeria one mag 4 edition en

OPEC Production cuts

Petroleum pump, petroleum industry equipment

The Organization of the Petroleum Exporting downturn as well as raising the geopolitical
Countries and Russia (known as OPEC+) has decided temperature, according to analysts. According to
to slash crude oil production by 2 million barrels per previous forecasts, oil prices would decline by the end
day. It would be an understatement to say that the of the year; however, OPEC's decision may have a
Biden administration was clearly blindsided by the negative effect on Brent oil price. It could reach more
alliance’s move. It appeared to be a blow to than $100 per barrel in December. The United States
consuming nations when the organization suddenly has been outraged that Saudi Arabia would support a
cut production and subsequently raised crude prices. step that would benefit the country in the short run,
This situation has led to accusations that Gulf but would conflict with its long-term security
producers are siding with Russia against the United interests. Over the last few months, the Biden
States and its western allies. Through its press administration has engaged in diplomatic efforts to
secretary Karine Jean-Pierre, the White House discourage its Middle Eastern allies from cutting oil
expressed frustration. She called the OPEC decision production. OPEC's move will create economic risks
“short-sighted” and stated “ It’s clear that OPEC+ is for the United States and Europe. American officials
aligning with Russia with today’s announcement.” are quite frustrated by the prospect of pump prices
However, OPEC has denied that accusation via its increasing further ahead of the crucial US mid-term
secretary-general, Haitham al-Ghais who said “this election in November. Biden’s controversial trip to
was not a decision from one country against another. Saudi Arabia in July seemingly was a failure and the
I want to be clear in saying this, and it’s not a decision Kingdom stance could indicate that the US is ceasing
from two or three countries against a group of other to exert influence over Gulf allies. It is a setback for
countries.” Saudi Arabia, one of the main players in President Biden’s foreign policy and a blow to the US
OPEC, also said the move was necessary to contend and its allies. Considering OPEC's decision, they will
with rising interest rates in the West and a weaker have a more difficult time implementing a price cap
global economy. Energy minister Prince Abdul-Aziz on Russian oil exports in December. Oil prices will
bin Salman stated “Show me where is the act of benefit Russia, which has so far remained resilient to
belligerence?” He said that markets required guidance Western sanctions. Furthermore, it will allow the
without which investment would not happen. This Russians to carry on with their war against Ukraine
move could increase the risk of a global economic .

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