Home World Biggest oil cut since pandemic: Biden condemns OPEC+ decision and works to reduce its impact on energy markets | Economy | Al Jazeera

Biggest oil cut since pandemic: Biden condemns OPEC+ decision and works to reduce its impact on energy markets | Economy | Al Jazeera

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Biggest oil cut since pandemic: Biden condemns OPEC+ decision and works to reduce its impact on energy markets | Economy | Al Jazeera

The OPEC+ group’s decision to cut oil production has angered the United States. The United States has accused the group of supporting Russia. On the other hand, U.S. President Joe Biden has directed the Department of Energy to allocate an additional 10 million barrels of strategic petroleum reserves to the market next month.

The White House issued a statement saying President Biden was “extremely disappointed” by the group’s decision at its Oct. 5 meeting in Vienna.

The statement said the decision made by OPEC+ was “short-sighted”. This is the largest oil production cut since the Covid-19 pandemic. The statement also said the decision would hurt countries already weighed down by high oil prices in the global economy. On the other hand, the global economy is suffering from the “negative impact” of Russia’s attack on Ukraine.

The statement also said, “According to the group’s decision on October 5, the Biden administration will consult with Congress on how to use other tools and mechanisms to reduce the oil-producing group’s control over energy prices.”

At the same time, the White House also said that Biden has ordered an additional amount of strategic reserves to be allocated in the market. And he will continue to direct the withdrawal of this reserve as needed to protect consumers and enhance energy security.

White House spokeswoman Karin Jean-Pierre said that, as she said, OPEC+ is clearly biased towards Russia. She also stressed that the U.S. considered the decision to cut production to be “wrong” because it was in Moscow’s own interests.

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(Al Jazeera)

Russia’s position

On the Russian side, Deputy Prime Minister Alexander Novak will consider the decision taken by the OPEC+ group to be “unprecedented”. He also attributed it to the need to balance the oil market.

In a statement to state television, Novak warned of a cap on Russian oil prices as part of a new EU sanctions package against Moscow. And this will have a very adverse effect on the global market.

The Russian official said that if Western countries decide to implement the move, Russia may reduce oil production in response to the negative impact. He also stressed that Russian companies will not supply oil to countries that have adopted the cap.

On the other hand, in a press conference at the end of the OPEC+ meeting, Saudi Energy Minister Prince Abdulaziz bin Salman said that the group will remain a fundamental force in stabilizing global markets.

He believes that the positive decisions taken by OPEC+ will help maintain the sustainability of the oil market. He also noted that the decision to reduce production will be extended until the end of 2023.

The Saudi energy minister praised the U.S. release of massive oil reserves because he believed the move came at the right time.

As for Moscow, the minister said it was unclear how a cap on Russian oil prices would be set. He stressed that no one in OPEC+ can predict the future of energy.

Commenting on these developments, U.S. Secretary of State Anthony Blinken emphasized that the United States and Saudi Arabia share common interests. But as he said, the U.S. sees the importance of ensuring adequate energy supplies in the market and keeping prices low.

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(Al Jazeera)

impact of decision

The OPEC+ group, which includes members of the Organization of the Petroleum Exporting Countries and partners such as Russia, ignored the White House’s pleas to continue increasing oil supplies and decided to cut output by 2 million barrels a day. This is the largest production cut since the outbreak of the new crown epidemic in 2020.

The move could lead to higher crude oil prices. Analysts worry that this will increase inflation, potentially bringing many countries to levels not seen in decades.

AFP said the move could give Russia support. Then, later in 2022, the EU will ban most of its oil exports and the G7 will try to control oil prices.

Crude oil prices rose in global markets after the OPEC+ decision was announced and surpassed the $93-a-barrel Brent benchmark.

The West accuses Russia of using energy as a weapon and using it to create a crisis in Europe. This could force Europe to set quotas for gas and electricity consumption in the winter of 2022.

In response, Moscow accused the West of using the dollar and financial systems such as the Swift as weapons against Russia.

And one of the reasons Washington is so focused on lowering oil prices is the U.S. attempt to deprive Moscow of gains from crude oil sales.

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