US to release more oil as Opec, Russia decide to cut production
The Opec Plus bloc including Saudi Arabia and Russia agreed on Wednesday to go in for a large production cut despite the US and Europe urging the group to increase production to bring oil prices down to earth.
Responding to the move by Opec Plus, US government officials said the Energy Department would be instructed to release 10 million more barrels of oil from the Strategic Petroleum Reserve in November.
“The [US] president is disappointed by the shortsighted decision by Opec Plus to cut production quotas while the global economy is dealing with the continued negative impact of Putin’s invasion of Ukraine,” US National Security Adviser Jake Sullivan and National Economic Council director Brian Deese said in a statement.
The 2-million-barrels-a-day cut represents about 2 per cent of global oil production.
Saudi Energy Minister Prince Abdulaziz bin Salman said Opec Plus was acting amid signs of a downturn in the world economy that might cause oil demand to weaken and prices to fall.
“We would rather be pre-emptive than sorry,” he added.
Following the group’s announcement, the price of Brent crude rose more than 1.5 per cent.
The bloc also agreed to extend to December 2023 an agreement that created Opec Plus (Opec plus Russia and its allies), which expires this December.
Earlier, the US had no plans to continue its six-month move to release one million barrels a day, which was scheduled to finish at the end of October.
US President Joe Biden and European leaders have been calling on Opec to increase oil production to ease fuel prices and punish Moscow for its war against Ukraine, while Russian President Vladimir Putin has been accused of using energy as a weapon against opposing countries.
Source: NY Times
