The Organization of the Petroleum Exporting Countries and allied oil producers, including Russia, agreed in October to cut production targets by 100,000 barrels per day.
OPEC+ ‘agreed to return to August 2022 production levels…noting 0.1 upward adjustment’ [million barrels per day] The transition to production level was only intended for September 2022,” the group said in a statement.
Global benchmark Brent crude futures rose 3.6% to $96.40 a barrel at 8:45 am on Monday.
But a drop of more than 20% in global oil prices since early June (with US oil prices down 7% in the last week alone) has made producers eye the risk of a sharp slowdown in China, the US and Europe. doing. will deprive them of demand for their barrels.
Gasoline prices in the US have also trended downwards, with the national average for a gallon of regular unleaded gasoline falling from over $5 in mid-June to $3.79 on Monday.
OPEC said in an August market report that the cartels will cut global demand for crude by 300,000 barrels in 2022 and by the same amount in 2023.
The Paris-based International Energy Agency said last month that the sharp surge in oil demand caused by the easing of pandemic restrictions is waning and will drop to 40,000 barrels per day in the fourth quarter of this year.
Russian supplies have also held up better than many expected in the face of Western sanctions, diverting millions of barrels per day to China and India. According to the IEA, Russian oil production fell just 310,000 barrels below pre-war levels in July.
It also influences the thinking of OPEC. Supplies could rise if Iran can agree a new nuclear deal with the US and Europe that eases sanctions on its exports.