On 5 October, Opec+ members announced a plan to cut oil production targets by 2 million barrels, starting in November, the first major cut since 2020. With an effective cut of less than half of this, the oil markets have mostly shrugged it off, strengthening only modestly. The actual market impact of the cut will be less than the announced headline cut. As many members of the group are already under-producing their targets, the net production cut is likely to be between 600,000 and 900,000 barrels a day, non-negligible given the recent trends, but not as extensive as the headline.
While claims that the Saudis and Emiratis and the rest of Opec+ are biased towards Russia seem overstated, it is clear that they are not shunning them.
However, the impacts of the cut on energy politics and US-GCC and West-GCC relations are much greater. This decision adds to the distrust between these major economies over energy policy and reduces resilience to the looming issue of Russian fuel supplies and longer-term issues about energy transition and investment. Beyond the cut itself is the political and geopolitical posturing surrounding the announcement, which highlights increased fragility and volatility of the market ahead of a planned EU embargo and G7 price cap on Russian oil.
Read the full article from Middle East Eye.
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