At a meeting in Vienna on Wednesday, OPEC+ decided to reduce oil output by the most amount since the 2020 COVID-19 pandemic, despite pressure from the US and others to pump more.
Oil prices, which have fallen to approximately $90 from $120 three months ago due to concerns about a global economic slowdown, increasing US interest rates, and a stronger currency, may rise as a result of the reduction.
According to a source with knowledge of the situation, the United States had urged OPEC not to move on with the cutbacks, claiming that the fundamentals did not support them.
In August, OPEC+’s supply fell around 3.6 million barrels per day shy of its goal.
The Biden Administration would likely get irritated by higher oil prices, if they were caused by sizable production cuts, Citi analysts said in a note.
Regarding a US antitrust lawsuit against OPEC, Citi said: “There might be more political reactions from the US, including additional releases of strategic stockpiles, coupled with some wildcards like further nurturing of a NOPEC bill.”
JPMorgan said that it anticipated Washington would respond by increasing the amount of oil stocks released.
