The OPEC+ alliance of oil-exporting countries decided Wednesday to sharply reduce its oil production in an attempt to “boost prices”.
Energy ministers cut production by a larger-than-expected two million barrels per day starting in November after gathering for their first face-to-face meeting at the Vienna headquarters of the OPEC oil cartel since the start of the COVID-19 pandemic.
The group said the decision was based on the “uncertainty that surrounds the global economic and oil market outlooks”.
Saudi Energy Minister Abdulaziz bin Salman stressed the cartel’s stated role as a guardian of stable energy markets.
“We are here to stay as a moderating force, to bring about stability,” he told reporters.
The impact of the production cut on oil prices — and thus the price of gasoline made from crude — will be limited somewhat because OPEC+ members already can’t meet their quotas.
The decision could help alliance member Russia weather a looming European ban on most of Moscow’s oil and comes amid an energy crisis created by Russia reducing natural gas supplies to Europe, whose leaders call it retaliation for supporting Ukraine and imposing sanctions.
Oil is trading well below its summer peaks because of fears that major global economies such as the U.S. or Europe will sink into recession due to high inflation, rising interest rates and uncertainty over the war in Ukraine.
“We are going through a period of diverse uncertainties, which could come our way, it’s a brewing cloud,” bin Salman said, adding that OPEC+ sought to remain “ahead of the curve.”
The White House said in a statement that “the President is disappointed by the short-sighted decision by OPEC+ to cut production quotas while the global economy is dealing with the continued negative impact of Putin’s invasion of Ukraine.
“At a time when maintaining a global supply of energy is of paramount importance, this decision will have the most negative impact on lower- and middle-income countries that are already reeling from elevated energy prices.”
The Biden administration will work with Congress on additional tools to reduce OPEC’s control over energy prices, the statement said.
At its last meeting in September, OPEC+ reduced the amount of oil it produces by 100,000 barrels a day in October. That token cut didn’t do much to boost lower oil prices, but it put markets on notice that the group was willing to act if prices kept falling.