OPEC+ Considers Major Oil Production Cuts Amid Middle East Tensions

investing.com:

Quiver Quantitative — The Organization of the Petroleum Exporting Countries (OPEC+) and its allies, led by Russia, are deliberating new oil production cuts, potentially reducing output by as much as 1 million barrels a day. This significant proposal comes amidst the ongoing Middle East conflict and could lead to a surge in oil prices. Initially scheduled for last week, the OPEC meeting was postponed due to disagreements over production quotas and is now set to occur virtually. While a consensus on further cuts remains uncertain, with some members opposing the reduction, Saudi Arabia has expressed strong support for the measure.

Saudi Arabia, a key player and the world's largest oil producer, had already unilaterally reduced its output by 1 million barrels in June, as part of an earlier agreement with OPEC members. The proposed additional cuts, if agreed upon, would significantly tighten global oil supply. The news of these potential cuts has already impacted oil markets, with Brent crude prices rising about 1.5% to over $82 a barrel. However, the prospect of such a drastic cut has faced resistance, particularly from Nigeria, Angola, and the United Arab Emirates, who are hesitant to reduce their output.

The potential for additional production cuts by OPEC+ could provoke a strong response from the United States, which previously criticized the alliance for their 2 million barrel per day reduction last year. This criticism was rooted in the belief that OPEC+ was inadvertently supporting Russia's actions in Ukraine. The backdrop of these discussions is also complex, with the Middle East conflict and global geopolitical tensions adding layers of uncertainty. The ongoing conflict in Gaza, coupled with regional tensions