The OPEC+ cartel has just delivered a massive snub to Western governments facing the worst energy crisis in half a century. Look past the buzzwords accompanying Wednesday’s cut in oil production — preemptive move, uncertain outlook — and it’s difficult to see the move as anything but an attack on a global economy that desperately needs the price of crude to remain subdued.
In all its history, OPEC — and its new incarnation, the OPEC+ alliance — has never curbed output so much, and so quickly, while Brent was still flirting with $100 a barrel. Triple-digit prices used to push the group into output-boost mode, not the reverse.
Breaking with tradition, OPEC+ on Wednesday announced it will reduce output by 2 million barrels a day — on paper — in November. Because so many of its members aren’t meeting their output targets, the real cut would be smaller, about 950,000 barrels per day, and shouldered mostly by Saudi Arabia, the United Arab Emirates and Kuwait.
For much of the past two years, the oil cartel has opted for a gradual, phased approach to managing supply. On Wednesday, it opted for “shock and awe” — it’s difficult to reconcile the big cut with the word moderation. OPEC+ officials offered no explanation for why the cartel needs to cut immediately and by so much, other than saying they wanted to be ahead of the curve. Has oil demand growth collapsed? Is non-OPEC supply growing fast? Are oil inventories increasing? None of these appear to be the case.
If anything, the fourth quarter looks tighter than the one just ended. Saudi Energy Minister Prince Abdulaziz bin Salman justified the move saying he couldn’t gamble with the market. By cutting so early and so quickly, OPEC+ is gambling with the global economy instead.
The Saudi-Russian Oil Axis Snubs Biden With Production Cuts
The OPEC+ cartel has just delivered a massive snub to Western governments facing the worst energy crisis in half a century. Look past the buzzwords accompanying Wednesday’s cut in oil production — preemptive move, uncertain outlook — and it’s difficult to see the move as anything but an attack on a global economy that desperately needs the price of crude to remain subdued.
In all its history, OPEC — and its new incarnation, the OPEC+ alliance — has never curbed output so much, and so quickly, while Brent was still flirting with $100 a barrel. Triple-digit prices used to push the group into output-boost mode, not the reverse.
Breaking with tradition, OPEC+ on Wednesday announced it will reduce output by 2 million barrels a day — on paper — in November. Because so many of its members aren’t meeting their output targets, the real cut would be smaller, about 950,000 barrels per day, and shouldered mostly by Saudi Arabia, the United Arab Emirates and Kuwait.
For much of the past two years, the oil cartel has opted for a gradual, phased approach to managing supply. On Wednesday, it opted for “shock and awe” — it’s difficult to reconcile the big cut with the word moderation. OPEC+ officials offered no explanation for why the cartel needs to cut immediately and by so much, other than saying they wanted to be ahead of the curve. Has oil demand growth collapsed? Is non-OPEC supply growing fast? Are oil inventories increasing? None of these appear to be the case.
If anything, the fourth quarter looks tighter than the one just ended. Saudi Energy Minister Prince Abdulaziz bin Salman justified the move saying he couldn’t gamble with the market. By cutting so early and so quickly, OPEC+ is gambling with the global economy instead.
READ MORE HERE
Share This Story, Choose Your Platform!
About the Author: Patriotman
Related Posts
Vietnam War LRRP – SSgt Tilley – Interviews W/ Warfighters
A Monopoly Of Violence, or, Why the Era of the Martial Civilian is More Prescient than Ever, by NC Scout
Gear Chat – Potential mistakes for the Armed/Prepared Citizen in setting up your gear
Gear Chat – LBE & Chest Rigs
GUNS N GEAR
Categories
Archives
Share this: