OPEC agrees to cut production after falling oil prices

Exactly one month ago, the OPEC+ group agreed to: Production increase in September A tiny amount, equivalent to about 0.1% of global demand, after intense pressure from the US and other big oil consumers to do more to bring down energy prices and inflation.

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.