The Organization of the Petroleum Exporting Countries (OPEC) and allied oil-producing nations have backed a plan to dramatically slash oil supplies in a bitter blow to President Joe Biden .
At an OPEC Plus meeting in Vienna, the cartel’s Joint Ministerial Monitoring Group recommended oil output be cut by 2 million barrels a day, or around two percent of the global oil supply.
A final decision will be taken at the OPEC Plus Ministers meeting later today (October 5).
If confirmed, this would be the deepest cut in oil production since the start of the COVID-19 pandemic in 2020.
Ahead of the meeting, it was reported both Saudi Arabia and Russia were expected to push for reductions of 1 to 2 million barrels per day.
The U.S. lobbied extensively against the move, according to CNN , which could cause gas prices to rise ahead of November’s midterm elections.
In a note, financial analysts at Citi warned: “Higher oil prices, if driven by sizeable production cuts, would likely irritate the Biden Administration ahead of U.S. mid-term elections.
Alexander Novak, the Russian deputy prime minister who is on a U.S. sanctions list, was among those who attended the meeting.
Speaking to reporters ahead of the meeting, United Arab Emirates Energy Minister Subail al-Mazroui insisted the decision would be based on technical considerations.
“The decision is technical, not political. We will not use it [OPEC] as a political organization,” he said.
Draft talking points obtained by the network on Monday said a production cut would be a “total disaster” for the U.S. and would be considered a “hostile act” by the American government.
One U.S. official commented: “It’s important everyone is aware of just how high the stakes are.”
OPEC is a group of 13 oil-producing nations which claim to control 80.4 percent of the world’s proven oil reserves. Another 11 countries, including Russia, are members of OPEC Plus, which works with OPEC toward some of its objectives.
Analysis by Bloomberg said the proposed cut will have less impact than the headline figures suggest because a number of OPEC Plus members are currently producing oil below their quote rate.
“If the full meeting of the Organization of Petroleum Exporting Countries and its allies ratify the proposal, it would have a smaller impact on global supply than the headline number suggests because several countries are already pumping well below their quotas,” Bloomberg reported ahead of the meeting.
“That means they would already be in compliance with their new limits without having to reduce production.”
In July, President Biden visited Saudi Arabia in an attempt to boost the Kingdom’s oil output , though only a small increase was announced.
Biden defended his trip to a country he’d previously labeled a “pariah” in an essay published by The Washington Post , that only mentioned oil once.
The U.S. president was photographed “fist bumping” Saudi Arabia’s de facto ruler Mohammed bin Salman, who U.S. intelligence agencies implicated in the 2018 murder of dissident Saudi journalist Jamal Khashoggi.
