The 23-member OPEC+ alliance agreed on a major cut in oil production Wednesday during a meeting in Vienna.
The organization is made up of the 13 major oil producers of OPEC, as well as 10 other non-OPEC countries, including Russia.
What did OPEC+ agree to?
Iran’s OPEC Governor Amir Hossein Zamaninia said the group agreed to reduce production by 2 million barrels per day from November. The cut is likely to lead to a rise in oil prices.
The organization said in a statement that the decision was based on the “uncertainty that surrounds the global economic and oil market outlooks.”
Saudi Energy Minister Abdulaziz bin Salman said that the organization was a “moderating force” and aimed “to bring about stability.” He added that OPEC+ intends to remain “ahead of the curve” in the face of a “period of diverse uncertainties.”
The alliance said it would renew the cooperation between OPEC members and non-members, which was due to expire at the end of the year.
Crude oil prices had fallen in recent months amid concerns over falling demand and the possibility of a global recession.
A rise in the price of crude oil could help Moscow, which is facing an EU ban on most of its crude exports set to take effect in December and a bid by G7 to cap Russian oil prices.
In July, US President Joe Biden appealed to Saudi Arabia to increase oil production. Later, OPEC+ agreed to boost production.
Biggest cut since height of COVID-19
The alliance reduced output by almost 10 million barrels per day in April 2020 in order to stymie a major drop in crude prices amid COVID-19 lockdowns.
Today’s decision marks the largest output reduction since 2020’s cut.
OPEC+ began to raise production last year following improvements in the market, and output returned to pre-pandemic levels.
Some members of the organization, including Russia, have already struggled to meet quotas set by the group, which could limit the impact of the OPEC+ agreement to slash production.
sdi/sms (AFP, AP, Reuters)
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