Saudi Arabian oil cut aids Russia
October 6, 2022 - OPEC+’s decision to cut oil production by two million barrels per day (bpd) – the Saudi-led cartel’s most significant production cut since 2020 – comes as the world battles soaring gas and coal prices.
The decision of the 24 OPEC+ oil-producing countries, including Russia, is equivalent to two per cent of the global supply.
The cut, which coincides with the U.S. midterm elections, also heightens tensions between Riyadh and Washington, where President Joe Biden has been trying to rein in prices ahead of the November vote.
In mid-July, President Biden travelled to Saudi Arabia to appeal to Crown Prince Mohammed bin Salman (MbS) for production increases. This bid also included approval of $5.3 billion worth of U.S. defensive missile system sales to Saudi Arabia and the UAE.
MbS responded by agreeing to a measly 100,000 barrels per day increase equivalent to just 0.1 per cent of global demand.
The White House called the latest decision “shortsighted” at a time when “maintaining a global supply of energy is of paramount importance.” White House spokesperson Karine Jean-Pierre told reporters it was “clear” Opec+ was “aligning with Russia”.
The cartel’s decision came hours after EU countries agreed to a U.S. plan to impose a price cap on Russian oil exports, an effort by western governments to drive down crude and fuel prices.