OPEC to Consider Cutting Oil Production to Increase Prices
Rabat - The Organization of Petroleum Exporting Countries (OPEC) is reportedly set to consider decreasing production to stop oil prices from dropping further on Wednesday.
The move could bring back oil prices to above $100 per barrel, a situation that will weigh down on the global economy, analysts warn.
The prospective cut in oil production could average one million barrels a day, according to a statement from delegates in the group reported by the Wall Street Journal.
As the news of OPEC’s decision to raise prices reached the market, crude oil prices have rallied by close to $4, exceeding $88 a barrel.
Before OPEC’s announcement to reconsider cutting production input, crude oil prices were dropping at the fastest rate since the start of the COVID-19 pandemic amid rising concerns of a looming global recession.
Historically, OPEC and its extension of 11 non-member states (OPEC+) have taken similar measures to reduce supply and bring oil prices up. However, the timing of the latest decision is especially controversial, as oil prices are already at all-time high levels.
To reach a decision on whether to cut production, the group announced they’re holding an in-person meeting in Vienna on Wednesday, converging reports indicate.
The group is also set to discuss a smaller reduction of 500,000 barrels a day or 1.5 million barrels a day, the delegates reportedly said.
The Wall Street Journal report indicates that the proposal to cut production by one million barrels a day was tabled by Russia, a non-member state of the OPEC group.
OPEC+ countries had already agreed to reduce oil production last month, responding to concerns of a global recession.
The price of crude oil dropped by an average of 23% in the third quarter of 2022, its fastest decline since the height of the 2020 pandemic.