OPEC President is ready to cut oil production

Consensus between exporting countries to lower oil production is within reach. The move would stabilize the market, the producers say. The OPEC President supported the Saudi Arabia officials, who put forward this idea, causing an oil price surge of more than $100 per barrel.

Growing beliefs of OPEC+ to cut oil production may be a subject of increasing energy costs. This happens despite Biden's efforts to make the countries export more. 

Alliance members are pushing for production cuts as the U.S. and Iran move closer to resuming the nuclear deal. Iran would bring back its oil to the market, reducing the energy costs.

Although the OPEC president doesn’t possess decision-making authority, he often invoices the majority’s opinion. Exporters have almost reached the agreement of lowering the extraction volumes.

“The time has come to change the strategy, since the Iranian oil return will play a significant role in the international market ,” said Helima Croft, an expert of RBC Capital Markets. Cuts in production could also undermine the benefits of the countries' nuclear deal, she said. As a result, it is the Biden administration that will suffer losses.

Earlier, the Prime Minister of Saudi Arabia, Abdulaziz bin Salman, noted the increased volatility may cause an oil volume reduction supplied by OPEC members in order to stabilize the market, which is fully consistent with the organization goals.

As OPEC Council Chairman Bruno Jean-Richard Itois said, these actions are fully justified, since the industry has not yet recovered from the last serious shock, i.e. the outbreak of pandemic. Thus, the global economy has been experiencing a slowdown.

In this sense, the Republic of Congo, along with Iraq, Kuwait, Algeria, Venezuela and other major oil producers, fully support Saudi Arabia. Equatorial Guinea, which is expected to replace the Republic of Congo in OPEC presidency next year, has also pushed the idea of ​​reducing exports.

The statements by Saudi Arabia sent oil prices skyrocketing to $100 a barrel for the first time in a month. That was the latest sign that Biden's visit to Jeddah in July didn’t bring the desired results, as the U.S. prices at gas stations have risen. So, the government’s expectations were not met.

The next meeting of OPEC is scheduled for September 5. The agenda doesn’t imply reducing oil production. Nevertheless, this idea is more relevant than ever with a potential global recession.