OPEC+ to cut oil production by 2mln barrels per day

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The Organization of the Petroleum Exporting Countries (OPEC)'s member states voted on Wednesday on cutting their production of oil and agreed to reduce their oil production by 2 million barrels a day in light of the world's surging energy crisis, a delegation source told Russian news agency Sputnik.

Earlier reports suggested that OPEC's Joint Ministerial Committee (JMMC) recommended cutting oil production by 2 million barrels per day.

"They have not formally agreed yet, but have already voted," the source said, commenting on whether the alliance has agreed on a decision to reduce oil production by 2 million barrels per day.

The sources clarified that all members voted in favor of the reduction after discussing oil market reports.

The US is concerned that OPEC's probable decision to reduce oil production will pose serious problems for the country and may even be interpreted as a hostile act, according to a US Treasury report.

The Biden administration assembled its top energy, economic, and foreign policy officials and entrusted them with lobbying Middle East allies such as Saudi Arabia, the United Arab Emirates, and Kuwait to vote against decreasing oil production.

To persuade its OPEC allies, the US proposed to purchase back up to 200 million barrels of oil from its OPEC partners.

In early September, OPEC+ declared its intention to resume oil production at the August level and cut it by 100,000 barrels per day (BPD) in October.

In a statement, the OPEC+ alliance said that "[OPEC+ decodes to] Revert to the production level of August 2022 for OPEC and non-OPEC Participating Countries for the month of October 2022 as per the attached table, noting that the upward adjustment of 0.1 mb/d to the production level was intended only for the month of September 2022."  

Biden had previously tried to convince the organization to increase its oil output in a bid to cool the red-hot energy prices, traveling to Saudi Arabia with hopes of persuading Saudi Arabia to promise to increase its oil output and relieve the pressure on the global supply chain.

However, the price of oil rose even further after he left West Asia without striking a deal with Saudi Arabia on Riyadh pumping out more oil.

Saudi Arabia and the United Arab Emirates have been viewed as the only two countries in the world's producer group, the Organization of Petroleum Exporting Countries, that have some spare capacity and could help increase global deliveries.

United Arab Emirates Crown Prince Sheikh Mohammed bin Zayed told French President Emmanuel Macron in late June that Saudi Arabia and the United Arab Emirates could barely increase oil production.

Attempting to curve the prices of oil in the US when all else failed, Washington has been actively using its Strategic Petroleum Reserve (SPR) for over a year. 

At the current pace of oil production, the reserves will shrink to a 40-year low with only 358 million barrels remaining by the end of October. Last year, the SPR location in Texas and Louisiana reportedly contained 621 million barrels. According to official information, the US is set to stop extractions from SPR in October.