OPEC+ Makes Small Trim To World Oil Supplies As Prices Fall

According to the Associated Press, on Monday, OPEC and allied oil-producing countries, including Russia, made a small trim in their supplies to the global economy, underlining their unhappiness, as recession fears help drive down crude prices — along with the cost of gasoline, much to the delight of consumers at the gas pumps.

Rolling back a mostly symbolic increase of 100,000 barrels per day in September, this October plan follows a statement made last month from Saudi Arabia’s energy minister, that the OPEC+ coalition could reduce their output at any time. Oil producers have generally resisted calls from U.S. President Joe Biden, to pump more oil to lower gasoline prices, reducing the burden on consumers. Sticking with only cautious increases, OPEC+ has had to make up for deep cuts made, during the COVID-19 pandemic. These were finally restored in August.

Proving a blessing for drivers in the U.S., as pump prices have eased, there continues to be growing worry about slumping future demand, that has helped send oil prices down, from June peaks of over $120 per barrel, that has cut into the profits for OPEC and these oil producing countries.

Under OPEC+ production goals, the supply cut for October, is only a small fraction of the 43.8 million barrels per day, still prices jumped after the announcement. In response, U.S. crude rose 3.3%, to $89.79 per barrel. OPEC+  countries’ energy ministers, said their September increase of 100,000 barrels a day was only for that month, and that the group could meet again, at any time to address ongoing market developments. This situation is tenuous at best.

Columbia University energy policy expert Jason Bordoff tweeted –

 (The amount of oil per day) “may seem negligible, but the message from today’s cut is clear: OPEC+ thinks they’ve fallen enough,”

– Jason Bordoff, Columbia University Energy Expert

Recession fears have pushed oil prices down, while worries of a loss of Russian oil sources, because of sanctions over its invasion of Ukraine, pushed them up. As a result, oil prices have fluctuated accordingly. Again, a highly tenuous situation.

Recession fears, it would seem, have taken the upper hand. Poised for a recession at the end of this year, due to skyrocketing inflation – fed by energy costs, economists in Europe are bracing for a difficult season. Additionally,  China’s severe restrictions, aimed at halting the spread of the coronavirus, have significantly cut growth in that major world economy as well.

Offering a potential boost to Biden and the Democratic Party, heading into midterm elections, falling oil prices have been a boon to U.S. drivers, sending gasoline prices down to $3.82/ gallon from record highs of over $5/gallon in June.

Quick to take credit for the lower pump prices, White House Press Secretary Karine Jean-Pierre said –

“The President has been clear that energy supply should meet demand to support economic growth and lower prices for American consumers and consumers around the world,”… “President Biden is determined to continue to take every step necessary to shore up energy supplies and lower energy prices.”

Karine Jean-Pierre, White House Press

In June, fears that U.S. and European sanctions would take Russian oil off the market, helped push Brent to over $123/barrel. Prices have fallen sharply in recent weeks, as it became clear that Russia is still managing to sell significant amounts of oil in Asia, albeit at sharply discounted prices. But concerns about the loss of Russian supply, are still out there because European sanctions, aimed at blocking most Russian oil imports, won’t take effect until the end of the year.

With the energy industry trapped between, warring political factions, over a broad group of suppliers – Joe Biden has America right where he wants it, dependent on other countries for oil and captive to the whims of their leaders and political /economic uncertainly. 

America was recently energy independent and needs to return to that position. U.S. consumers should not be held captive by the economies of other countries, when we have the capacity to be self-sufficient. When Americans go to the polls this November, they need to remember, where we were just 24 months ago. They not see anything that Joe Biden has done as worthwhile – since, He and his administration put us in this position, just since taking office.

It is positive that gas prices are coming down – but for how long? And what turmoil is ahead in these countries, that might hold Americans captive at the pump? These are hard to answer, but very poignant questions.

“The American tradition of Washington and Hamilton and Madison and Lincoln and TR and Pat Buchanan, is of economic nationalism – making America an independent, self-sufficient, sovereign forever country that’s able to stand on its own feet.”

-Pat Buchanan

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